UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended:
Commission File Number:
(Exact name of registrant as specified in its charter)
N/A
(Former name of registrant as specified in its charter)
| State or other jurisdiction of | I.R.S. Employer | |
| incorporation or organization | Identification Number |
(Address of principal executive offices)
Issuer’s telephone number:
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.00001 par value per share
Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the 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.)
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 during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files).
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer, large accelerated filer or smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller Reporting Company
| |
| Emerging growth company |
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. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act) Yes☐ No
As of June, 30, 2023, the market value of our common
stock held by non-affiliates was approximately $
As of April 19, 2024, shares of common stock, $.00001 par value per share, of the registrant were outstanding.
Documents incorporated by reference: None
Explanatory Note
GBT Technologies, Inc. (the "Company") is filing this Amendment No. 1 on Form 10-K/A (the "Amendment") to address the comments received from the U.S. Securities and Exchange Commission (the "SEC") in their letter dated August 14, 2024, regarding our Form 10-K for the fiscal year ended December 31, 2023. Specifically, the Company is amending the filing to revise the Report of the Independent Registered Public Accounting Firm to cover the balance sheets as of December 31, 2023, and December 31, 2022, and the related statements of operations, stockholders' equity (deficit), and cash flows for each of the years then ended, as required by Rules 2-02 and 8-02 of Regulation S-X.
Pursuant to the rules of the SEC, Part IV, Item 15 of the original Form 10-K has been amended to include the updated auditor's report, as well as currently-dated certifications.
Except as described above, this Amendment does not amend, modify or update the information in, or exhibits to, the Original 10-K, and we have not updated disclosures included therein to reflect any subsequent developments or events. This Amendment should be read in conjunction with the Original 10-K and with our other filings made with the SEC subsequent to the filing of the Original 10-K.
FORM 10-K/A
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023
INDEX
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STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
In this annual report, references to “GBT”, “GOPH”, “GTCH” or “the Company,” or “we,” or “us,” and “our” refer to GBT Technologies Inc. or f/k/a Gopher Protocol Inc. Except for the historical information contained herein, some of the statements in this report contain forward-looking statements that involve risks and uncertainties. These statements are found in the sections entitled “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures about Market Risk.” They include statements concerning: our business strategy; expectations of market and customer response; liquidity and capital expenditures; future sources of revenues; expansion of our proposed product line; and trends in industry activity generally. In some cases, you can identify forward-looking statements by words such as “may,” “will,” “should,” “expect,” “plan,” “could,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “goal,” or “continue” or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including, but not limited to, the risks outlined under “Risk Factors,” that may cause our or our industry’s 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 such forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to our ability to successfully develop and market our products to customers; our ability to generate customer demand for our products in our target markets; the development of our target markets and market opportunities; our ability to manufacture suitable products at a competitive cost; market pricing for our products and for competing products; the extent of increasing competition; technological developments in our target markets and the development of alternate, competing technologies in them; and sales of shares by existing shareholders. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.
Below is a summary of material factors that make an investment in our securities speculative or risky. Importantly, this summary does not address all of the risks and uncertainties that we face. Additional discussion of the risks and uncertainties summarized in this risk factor summary, as well as other risks and uncertainties that we face, can be found under ‘Risk Factors’ in Part I, Item 1A of this Annual Report on Form 10-K. The below summary is qualified in its entirety by that more complete discussion of such risks and uncertainties. You should consider carefully the risks and uncertainties described under ‘Risk Factors’ in Part I, Item 1A of this Annual Report on Form 10-K as part of your evaluation of an investment in our securities.
| ● | We have a limited operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. |
| ● | Our limited operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance. |
| ● | The COVID-19 outbreak caused disruptions in our development operations, which have resulted in delays in existing projects and may have additional negative impacts on our operations. |
| ● | Our results of operations have not resulted in profitability and we may not be able to achieve profitability going forward. |
| ● | We have not generated positive cash flow from operations and our ability to generate positive cash flow is uncertain. If we are unable to generate positive cash flow or obtain sufficient capital when needed, our business and future prospects will be adversely affected and we could be forced to suspend or discontinue operations. |
| ● | We will require additional capital to support business growth and this capital might not be available on acceptable terms, if at all. |
| ● | We depend upon key personnel and need additional personnel. |
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| ● | Our business requires substantial capital and if we are unable to maintain adequate cash flows from operations our profitability and financial condition will suffer and jeopardize our ability to continue operations. |
| ● | There is currently a limited public market for our common stock. Failure to further develop or maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for you to sell your stock. |
| ● | If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock. |
| ● | Because we are quoted on the OTC PINK marketplace instead of a national securities exchange, our investors may experience significant volatility in the market price of our stock and have difficulty selling their shares. |
| ● | Our stock price and trading volume may be volatile, which could result in substantial losses for our stockholders. |
| ● | We have not paid dividends in the past and have no immediate plans to pay cash dividends. |
| ● | Shares eligible for future sale may adversely affect the market for our Common Stock. |
| ● | You may experience future dilution as a result of future equity offerings. |
| ● | Our charter documents and Nevada law may inhibit a takeover that stockholders consider favorable. |
| ● | There are limitations on director/officer liability. |
| ● | Penny stock regulations may impose certain restrictions on marketability of our securities. |
| ● | FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock. |
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
GBT Technologies Inc. (formally known as Gopher Protocol Inc., the “Company”, “GBT”, “Gopher”, “Gopher Protocol” “GOPH” or “GTCH”) was incorporated on July 22, 2009 under the laws of the State of Nevada. The Company via its 50% subsidiary, is targeting growing markets such as development of Internet of Things (IoT) and Artificial Intelligence (AI) enabled networking and tracking technologies, including wireless mesh network technology platform and fixed solutions, development of an intelligent human body vitals device, asset-tracking IoT, and wireless mesh networks. Effective August 5, 2019, the Company changed its name from Gopher Protocol Inc. to GBT Technologies Inc. The Company technologies can be grouping as (i) the provision of IT consulting services; and (ii) from the licensing of its technology. (ii) from selling electronic products through e-commerce platforms. (iv) an advanced RF-based computer vision system, to utilize this platform potential to significantly enhance object detection and imaging capabilities, using radio waves to create detailed 2D and 3D images .On February 18, 2022 the Company, effective March 1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company shares revenues generated by Mahaser with respect to e-commerce sales through the online retail platform in the United States of America. Effective July 1, 2023, the Company agreed to terminate the RSA with Mahaser Ltd.
GBT Tokenize Joint Venture (Impaired in 2021)
On March 6, 2020, the Company through Greenwich entered into a Joint Venture and Territorial License Agreement (the “2020 Tokenize Agreement”) with Tokenize-It, S.A. (“Tokenize”). Under the 2020 Tokenize Agreement, the parties formed GBT Tokenize and Tokenize contributed its technology portfolio as described in the 2020 Tokenize Agreement with each Tokenize and the Company owning 50% of GBT Tokenize. The purpose of GBT Tokenize is to develop, maintain and support source codes for its proprietary technologies including advanced mobile chip technologies, tracking, radio technologies, AI core engine, electronic design automation, mesh, games, data storage, networking, IT services, business process outsourcing development services, customer service, technical support and quality assurance for business, customizable and dedicated inbound and outbound calls solutions, as well as digital communications processing for enterprises and start-ups (“Technology Portfolio”). In addition to the Technology Portfolio, Tokenize contributed the services and resources for the development of the Technology Portfolio to GBT Tokenize. The Company contributed 2,000,000 shares of common stock.
On May 28, 2021, the parties agreed to amend the 2020 Tokenize Agreement to expand the territory granted for the Technology Portfolio under the license to GBT Tokenize to include the entire continental United States. The Company issued GBT Tokenize an additional 14,000,000 shares of common stock. On June 30, 2021, Tokenize and its shareholder assigned all their rights under the 2020 Tokenize Agreement, including the Company’s pledged 50% ownership in GBT Tokenize to Magic.
On April 11, 2022, the Company, through Greenwich, entered into a Master Joint Venture and Territorial License Agreement (the “2022 Tokenize Agreement”) with Magic and Tokenize which replaced the 2020 Tokenize Agreement. The Company issued GBT Tokenize an additional 150,000,000 shares of common stock of the Company.
GBT Tokenize has developed a vital device based on the Technology Portfolio that is ready for commercialization, as well as certain derivative technologies, which positioned GBT Tokenize to further develop or license certain code sources. On April 3, 2023, GBT Tokenize entered its first commercial transaction to date through the sale of the Avant-AI! technology that been developed by GBT Tokenize, based on the Technology Portfolio pursuant to which GBT Tokenize received 26,000,000 shares of common stock of Buyer’s shares – Avant Technologies, Inc.
On July 20, 2023, the Company through its wholly owned inactive subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize Corp (“GBT Tokenize”).
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The 2023 Tokenize Agreement restated and replaced the 2022 Tokenize Agreement. Pursuant to the 2023 Tokenize Agreement, as a result of the contribution of the Technology Portfolio by Tokenize and the subsequent contribution of services for the development of the Technology Portfolio by Tokenize and Magic, GBT Tokenize has been able to continue in operation, which has benefited the Company despite its contribution of 166 million shares of common stock valued at approximately $50,000. In order to maintain its 50% ownership interest in GBT Tokenize, the Company agreed to contribute its portfolio of intellectual property to GBT Tokenize and issue to GBT Tokenize 1,000 shares of Series I Preferred Stock (the “Series I Stock”) with a stated value of $35,000 per share which is convertible into common stock of the Company by dividing the stated value by the conversion price of $0.0035, which, if converted in full would result in the issuance of 10 billion shares of common stock of the Company. Further, the Series I Stock will vote on an as converted basis.
On November 2, 2023, the Company received a notice of completion (notice # 508205896) of the recoding of assignment for its portfolio of intellectual property to GBT Tokenize. The assignment was recorded by the assignment recording branch of the U.S. Patent and Trademark Office. A complete copy of this assignment is available at the assignment branch room on the reel and frame number 065420/0434 (in total 16 pages).
Active Investments:
VisionWave:
Effective as of March 19, 2024, Tokenize, the Company entered into a Patent Purchase Agreement with VisionWave Technologies Inc. (“VisionWave”) pursuant to which VisionWave agreed to acquire from Tokenize the entire right, title, and interest of certain patents and patent applications providing an intellectual property basis for a machine learning driven technology that controls radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary and in motion objects (“VisionWave PPA”). The Purchase Price for the asset is $30,000,000 (the “Purchase Price”), which VisionWave will pay with shares of common stock, $0.0001 par value per share (the “Common Stock”). The Parties agree that the final Purchase Price may be adjusted and will be governed by a valuation report issued by a professional third party (“Valuation”). If the final Purchase Price per the Valuation is less than $30,000,000, Tokenize has the option to cancel this Agreement. In accordance therewith, VisionWave agreed to issue and deliver to Tokenize, 1,000 shares of Common Stock (the “Shares”) representing 50% of VisionWave’s issued and outstanding shares of Common Stock, where the remainder of the 50% of VisionWave’s issued and outstanding shares of Common Stock are owned by a corporation controlled by a third party.
The carrying amount of this investment December 31, 2022 and 2022, was $0 and $0, respectively.
Avant Investment:
On April 3, 2023, Tokenize entered into an Asset Purchase Agreement (“APA”) with Avant Technologies, Inc (prior name: Trend Innovation Holdings, Inc. “AVAI”), in which GBT consented, pursuant to which Tokenize sold certain assets relating to proprietary system and method named Avant-Ai, which is a text-generation, deep learning self-training model (the “System”).
In consideration of acquiring the System, AVAI is required to issue to the Seller 26,000,000 common shares of AVAI (the “Shares”). The Shares been pledge to a third party as a collateral.
In addition, AVAI, Tokenize and GBT entered into a license agreement regarding the System, granting Tokenize and/or GBT a perpetual, irrevocable, non-exclusive, non-transferable license for using the System to be used in its own development, as in-house tool, where Tokenize or GBT may not sublicense its rights hereunder to any customer or client.
MetAlert (prior name GTX Corp):
On April 12, 2022, Tokenize, entered into a series of agreements with GTX Corp (“GTX”) and various note holders of GTX pursuant to which Tokenize acquired a convertible promissory note of GTX of $100,000 (the “GTX Notes”). In addition, GBT Tokenize acquired 76,923 (GBT acquired 5,000,000 in the original deal, where GTX to perform a corporate action of 1:65 reverse split on September 20, 2022) shares of common stock of GTX for $150,000 - in total FV of $8,846 as of June 30, 2023 based on level 1 stock price in OTC markets.
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The GTX Notes bear 10% interest and 50% of the principal may be converted into shares of common stock on a one-time basis at a conversion price of $0.01 per share. The remaining 50% of the principal must be paid in cash. The closing occurred on April 12, 2022. As of December 31, 2023, the Company wrote off the 50% of the convertible principal with all unpaid interest in total of $65,613 due to the collectability issue.
GTX changed its name into Metalert Inc. on or about September 20, 2022.
On September 30, 2022, GBT Tokenize, loaned MetAlert Inc., a Nevada corporation (f/k/a GTX Corp.) (“MetAlert”) $90,000. For such loan, MetAlert provided Tokenize a promissory note of $90,000 which is due and payable together with interest of 5% upon the earlier of September 19, 2023 or when declared by Tokenize. As of December 31, 2023, the Company wrote off the entire of the convertible principal with all unpaid interest in total of $95,770 due to the collectability issue.
MetAlert designs, manufactures and sells various interrelated and complementary products and services in the wearable technology and IoMT (Internet of Medical Things) marketplace.
On or about January 31, 2023 GTB Tokenize Corp the Company’s 50% owned subsidiary, assigned $7,500 from the GTX Notes to Stanley Hills, LLC, which in turn converted said $7,500 plus interest into 812,671 GTX shares. Stanley Hills, LLC credit GBT Tokenize for $146,037 for the transaction, reducing its credit outstanding balances with the Company and GBT Tokenize Corp.
As of December 31, 2022, the notes had an outstanding balance of $190,000 and accrued interest of $8,475. As of December 31, 2023, the notes had an outstanding balance of $46,250 and accrued interest of $0.
As of December 31, 2023 and 2022, the marketable security had a FV of $1,692 and $12,358, respectively.
Wireless mesh networking:
Wireless mesh networks consist of LAN/MAN/WAN solutions that are infrastructural-intensive, may rely on regulated frequencies and bandwidth, often have so-called “last mile” problems areas where either economics or population density make it too expensive for current solutions to cover, and difficult to manage centrally. The Company’s GopherInsight platform makes it easy to add and manage last mile capacity. The solution is easily integrated into existing networks. The Company’s AI platform is designed for easy integration with, and management of, additional coverage for customer networks.
Wireless mesh networking markets - The Company potentially will target telecommunications providers, corporate entities that run LAN or wide-area networks, universities, and government entities.
Wireless mesh networking markets competition - The competitors for wireless mesh networking solutions, and AI solutions, are the entities themselves that have their own capability. The Company’s strategy is to integrate and “wrap around” those solutions to make them more efficient, less costly, and less infrastructural-intensive, while at the same time solving last mile problems to the end user.
AlKhatib Consulting Group:
On February 1, 2023, the Company engaged AlKhatib Consulting Group to provide exclusive representation services in connect with managing market partners, effective on February 1, 2023 for 24 consecutive months.
IDL Representation Agreement
On August 17, 2023, Tokenize, which is 50% owned by the Company, which provided its consent, entered into a Representation Agreement (the ‘RA’) with IDL Concepts, LLC (the ‘Agent’) , to represent Tokenize in a potential purchase transaction facilitated by the Agent transferring all of Tokenize’s right, title, and interest in certain Assigned Patent Rights, as defined in the RA, free and clear of any restrictions, liens, claims, and encumbrances, and may include rights to technology and software developed by Tokenize. Tokenize owns certain provisional patent applications, patent applications, patents, and/or related foreign patents and applications, and wishes potentially to sell all right, title, and interest in such patents and applications and the causes of action to sue for infringement thereof and other enforcement rights. Tokenize will pay Agent a commission of 20% of any proceeds of any closed transaction under this RA, including all cash, equity payments and any other form of consideration upon a sale, or any monetization activity under the RA. The RA carved out certain intellectual properties held by Tokenize that Tokenize is in active negotiation with third parties.
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Non Active Investments:
GBT Technologies, S.A. (“GBT”) (fully impaired in 2019)
Investment in GBT Technologies, S.A.
On June 17, 2019, the Company, AltCorp Trading LLC, a Costa Rica company and a wholly-owned subsidiary of the Company (“AltCorp”), GBT Technologies, S.A., a Costa Rica company (“GBT-CR”) and Pablo Gonzalez, a shareholder’s representative of GBT-CR (“Gonzalez”), entered into and closed an Exchange Agreement (the “GBT Exchange Agreement”) pursuant to which the parties exchanged certain securities. In accordance with the Exchange Agreement, AltCorp acquired 625,000 shares of GBT-CR representing 25% of its issued and outstanding shares of common stock from Gonzalez for the issuance of 20,000 shares of Series H Convertible Preferred Stock of the Company and a Convertible Note in the principal amount of $10,000,000 issued by the Company (the “Gopher Convertible Note”) as well as the transfer and assignment of a Promissory Note payable by Gopher Protocol Costa Rica Sociedad De Responsabilidad Limitada to the Company of $5,000,000 dated February 6, 2019 (of which the underlying security for this Promissory Note is 30,000,000 restricted shares of common stock of Mobiquity Technologies, Inc. (“Mobiquity”) and 60,000,000 restricted shares of common stock of Mobiquity.
The Gopher Convertible Note bears interest of 6% and is payable at maturity on December 31, 2021. At the election of Gonzalez, the Gopher Convertible Note can be converted into a maximum of 20,000 shares of Series H Preferred Stock. Each share of Series H Preferred Stock is convertible, at the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($500 per share). The Series H Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series H Preferred Stock shall be entitled to one vote for each share of common stock that the Series H Preferred Stock may be convertible into. Upon conversion of the Gopher Convertible Note and the 20,000 shares of Series H Preferred Stock, Gonzalez would be entitled to less than 50% of the resulting outstanding shares of common stock of the Company following conversion in full and, as a result, such transaction is not considered a change of control.
On May 19, 2021, the Company, entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of Note Balance Principal and Accrued Interest (the “Gonzalez Agreement”) with third party, GBT-CR, IGOR 1 Corp and Gonzalez. Pursuant to the Gonzalez Agreement, without any party admission of liability and to avoid litigation, the parties had agreed to (i) extend the GBT Convertible Note maturity date to December 31,2022, (ii) amend the GBT Convertible Note terms to include a beneficial ownership blocker of 4.99% and a modified conversion feature to the GBT Convertible Note with 15% discount to the market price during the 20 trading day period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT Convertible Note by Gonzalez to a third party.
GBT-CR is in the business of the strategic management of BPO (Business Process Outsourcing) digital communications processing for enterprises and startups, distributed ledger technology development, AI development and fintech software development and applications.
The Company accounted for its investment in GBT-CR using the equity method of accounting; however, in 2020, the Company owned less than 20% after GBT-CR issued additional shares to other investors therefore exercised no control over GBT-CR; therefore, this investment is currently accounted for under the cost method. Moreover, on March 19, 2020, California Governor Gavin Newsom issued a stay-at-home order to protect the health and well-being of all Californians and to establish consistency across the state in order to slow the spread of COVID-19. California was therefore under strict quarantine control and travel has been severely restricted, resulting in disruptions to work, communications, and access to files (due to limited access to facilities). The stay-at-home order was lifted in California only on January 25, 2021. As such, the Company was unable to access or to contact GBT-CR on an on-going basis, and cannot get information about GBT-CR.
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Revenue Sharing Agreement – Variable Interest Entity (VIE) – Discontinued
On February 18, 2022, the Company, effective March 1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company shares in revenues generated by Mahaser e-commerce sales through the online retail platform in the United States of America. Mahaser owns an e-commerce platform as a store which is the legal, exclusive owner of Ravenholm Electronics. The Company will operate the e-commerce platform and entitled to 95% for all revenue generated by and received by Mahaser from March 1, 2022 through December 31, 2022. The RSA provides that the Company will be entitled to appoint a manager to Mahaser. As consideration, the Company will pay Mahaser $100,000 no later than March 1, 2022 and issue Mahaser 1,000,000 shares of the Company’s restricted common stock. The Company shall have no obligations to make any further payments to Mahaser. For any further extensions, the Company will have the option to extend the RSA for annual payment of $200,000, which can be payable with the Company’s shares of common stock payable based on 20 days VWAP prior to issuance. On March 16, 2022 the parties entered into Amendment No. 1 to the to the RSA, where all consideration to be paid or issued to Mahaser will be deferred until such time where the e-commerce platform generated in cumulative revenue of $1,000,000.
On March 31, 2022, the parties entered into Amendment No. 2 to the RSA, where Mahaser agreed to pay the Company 100% per year for all revenue generated by and received by seller from the sales by Amazon within the United States of America as follows from March 1, 2022 through December 31, 2022. The Company will be responsible for 100% of the cost of goods sold as well. In addition, the Company is entitled to earn 100% revenues and cost of goods sold of the period from February 1, 2022 to February 28, 2022. On January 1, 2023 the company extended their partnership to December 31, 2023.
Effective July 1, 2023 the Company terminated its joint venture revenue sharing (“Termination Agreement”) with Mahaser LTD (“Mahaser”). Until June 30, 2023, the Company’s variable interests in Mahaser obligate the Company to absorb deficits and provide it with the right to receive benefits that could potentially be significant to Mahaser. The Company evaluated for the period ended on June 30, 2023, whether it has a variable interest in Mahaser, whether Mahaser is a VIE and whether the Company has a controlling financial interest in Mahaser. The Company concluded that it has variable interests in Mahaser on the basis of GBT has 100% control over the JV/revenue sharing, and as such should consolidate the JV into its books and records as it assigned 100% financial responsibility. Mahaser’s equity at risk, as defined by GAAP, is considered to be insufficient to finance its activities without additional support, and, therefore, Mahaser is considered a VIE.
The following table summarizes the carrying amount of the assets and liabilities of Mahaser included in the Company’s consolidated balance sheets at December 31, 2023 and as December 31, 2022 (after elimination of intercompany transactions and balances):
Assets of consolidated variable interest entity (“VIE”) included in the consolidated balance sheets as of December 31, 2023 (after elimination of intercompany transactions and balances) consist of:
| Current assets: | ||||
| Cash and equivalents | $ | 41,077 | ||
| Accounts Receivable | 35,536 | |||
| Inventory | 12,860 | |||
| Other current asset | 452 | |||
| Total current assets | $ | 89,925 |
Liabilities of consolidated VIE included in the consolidated balance sheets above (after elimination of intercompany transactions and balances) consist of:
| Current liabilities | ||||
| Total current liabilities | $ | 169,279 |
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Statements of operations of consolidated VIE included in the consolidated statements of operations above (after elimination of intercompany transactions and balances) consist of:
| Statements of operations | ||||
| Sales | $ | 349,204 | ||
| Cost of goods sold | 324,918 | |||
| Gross profit | (24,286 | ) | ||
| General and administrative expenses | 62,671 | |||
| Net Income | $ | (38,385 | ) |
Assets of consolidated variable interest entity (“VIE”) included in the consolidated balance sheets as of December 31, 2022 (after elimination of intercompany transactions and balances) consist of:
| Current assets: | ||||
| Cash and equivalents | $ | 93,581 | ||
| Inventory | 11,569 | |||
| Due From related party | 20,270 | |||
| Total current assets | $ | 125,420 |
Liabilities of consolidated VIE included in the consolidated balance sheets above (after elimination of intercompany transactions and balances) consist of:
| Current liabilities | ||||
| Total current liabilities | $ | 94,496 |
Statements of operations of consolidated VIE included in the consolidated statements of operations above (after elimination of intercompany transactions and balances) consist of:
| Statements of operations | ||||
| Sales | $ | 1,107,555 | ||
| Cost of goods sold | 817,754 | |||
| Gross profit | 289,801 | |||
| General and administrative expenses | 330,647 | |||
| Net Loss | $ | 40,846 |
The periods ended on December 31, 2023 and December 31, 2022 does not include the result of operation by Mahaser, as it ceases being VIE.
TGHI Agreement (fully depreciated):
On January 28, 2022, the Company entered into a Stock Purchase Agreement with Marko Radisic (the “Seller”) and Touchpoint Group Holdings, Inc. (“TGHI”) pursuant to which the Company acquired 10,000 shares of Series A Convertible Preferred Stock (the “Touchpoint Preferred”) from the Seller for $125,000. The Touchpoint Preferred is convertible into 10,000,000 shares of common stock of Touchpoint. On February 22, 2022, the Company entered into an Intellectual Property License and Royalty Agreement with TGHI pursuant to which the Company granted TGHI a worldwide license for its technologies for five years in the domains of Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies pertaining to the Company’s digital currency technology (the “Technology”). GBT will charge TGHI earned royalties based on actual uses by TGHI of the Technology resulting from revenue attributable to the use, performance or other exploitation of the Technology, to the extent applicable, after deducting any taxes that the Company may be required to collect, and deducting any international sales, goods and services, value added taxes or similar taxes which the Company is required to pay, if any, excluding deductions for taxes on the Company net income. TGHI agreed to issue the Company 10,000,000 shares of common stock of TGHI in the FV of $50,000 as a one-time fee for the Company entering this Intellectual Property License and Royalty Agreement, which was booked contract liabilities and amortized over the five-year term. The Company has yet to earn any royalty income under this agreement as of December 31, 2023. TGHI converted the Touchpoint Preferred into 10,000,000 shares of common stock of Touchpoint on February 23, 2022 resulting in the Company owning 20,000,000 shares of common stock of Touchpoint in total FV of $2,000 as of June 30, 2023 based on level 1 stock price in OTC markets.
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On or about May 10, 2023 TGHI filed with the SEC Form 15 choosing to become a none reporting entity. As such the Company depreciate its entire investment with TGHI.
Metaverse Agreements (Voided)
On June 10, 2022, the Company, entered into a Joint Venture and Territorial License Agreement (the “Metaverse Agreement”) with Ildar Gainulin and Maria Belova (collectively, the “Licensor”). Under the Metaverse Agreement, the parties formed Metaverse Kit Corp., a Nevada corporation (“Metaverse Kit”). The purpose of Metaverse Kit was to develop, maintain and support source codes for its proprietary technologies and comprehensive platform that combines a core virtual reality platform and an extended set of real-world functions to provide a metaverse experience initially within the area of sports and then expanding into virtual worlds of entertainment, live events, gaming, communications and other cross over product opportunities (the “Meta Portfolio”). Under the Metaverse Agreement, Licensor agreed to provide Metaverse Kit with the licensed technology and expertise. In connection therewith, the parties entered an Asset Purchase Agreement (the “Metaverse APA”) concurrently with the Metaverse Agreement whereby Licensor sold Metaverse Kit all source codes pertaining to the Meta Portfolio. Further, Licensor provided an exclusive license to Metaverse Kit throughout the world for the invented product/service and the related platforms relating to the Meta Portfolio and to use the know how to develop, manufacture, sell, market and distribute the Meta Portfolio throughout the world. The Company was required to contribute 500,000,000 shares of common stock of the Company (“GBT Shares”) to Metaverse Kit. Licensor and the Company were to each own 50% of Metaverse Kit. The Company pledged its 50% ownership in Metaverse Kit to Igor 1 Corp. to secure a convertible note held by Igor 1 Corp. The Company was to appoint two directors and Licensor was allowed to appoint one director of Metaverse Kit. In addition, Metaverse Kit, Licensor and Elentina Group, LLC (“Elentina”) entered into a Consulting Agreements in which IGBM and Elentina, each were engaged to provide services for $25,000 per month payable quarterly which Metaverse Kit has the option to pay in shares of common stock calculated by the amount owed divided by the Company’s 10-day VWAP. Licensor and Elentina were to provide services in connection with the development of the business as well as Metaverse Kit’s capital raising efforts. The term of the Consulting Agreement was two years. The closing of the Metaverse Agreement occurred on June 13, 2022.
On March 14, 2023, the Company received a counter signed Settlement Agreement and Release by Licensor dated March 2, 2023 (“Settlement Agreement”). Pursuant to the Settlement Agreement, the parties agreed that Metaverse Agreement, the Metaverse APA and the Consulting Agreement are void and cancelled. Licensor agreed to pay $5,000 to the Company as settlement payment and surrender their shares in Metaverse Kit.
Regulatory
The Company seeks to conduct business with US government agencies and hired a consulting firm for general guidance with the GSA (General Services Administration) application process. GSA approval status describes an organization that have been approved to sell to the US Government through the U.S. General Services Administration (GSA). The GSA is an independent agency of the United States Government that was established in 1949 to help manage, approve, and facilitate government contracts, products, bids and verify that product and services properly sourced under the US Government guidelines. The GSA is the purchasing department of the US Government and lists contracts or schedules potential vendors that can bid on to get government business. To become eligible to bid on a GSA schedule, it is required to complete several important steps, among them are registering in the government’s SAM (System for Award Management), and providing previous customer contact information as a means for the GSA to perform a past performance evaluation. More information can be found on GSA web site at: https://www.gsa.gov. The Company applied and received their extension notice for SAM registration #832011626/91FW3 until May 2023. The active status makes GBT eligible to potentially contract business with US government contractors and sub-contractors, local cities or receive federal funds. SAM (www.sam.gov) is a central registration system for government contractors and suppliers. To remain eligible to do business with the federal government, an entity must renew its registration with SAM every year.
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Intellectual Property
Per the 2023 Tokenize Agreement which restated and replaced the 2022 Tokenize Agreement, the Company assigned its entire IP Portfolio to Tokenize. On November 2, 2023, the Company received a notice of completion (notice # 508205896) of the recoding of assignment for its portfolio of intellectual property to Tokenize. The assignment was recorded by the assignment recording branch of the U.S. Patent and Trademark Office. A complete copy of this assignment is available at the assignment branch room on the reel and frame number 065420/0434 (in total 16 pages).
Employees
As of December 31, 2023, we had 3 full time employees and 1 part time employees. We also utilize outside consultants and contractors as needed.
Clients and Customers
Sales for both the years ended December 31, 2023 and 2022 were $0 and $90,000. Sales are derived from providing IT consulting services.
ITEM 1A. RISK FACTORS
As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item 1A. Risk Factors. Despite the fact that we are not required to provide risk factors, we consider the following factors to be risks to our continued growth and development:
WE HAVE A LIMITED OPERATING HISTORY IN AN EVOLVING INDUSTRY, WHICH MAKES IT DIFFICULT TO EVALUATE OUR FUTURE PROSPECTS AND MAY INCREASE THE RISK THAT WE WILL NOT BE SUCCESSFUL.
We have a limited operating history in an evolving industry that may not develop as expected. Assessing our business and future prospects is challenging in light of the risks and difficulties we may encounter. These risks and difficulties include our ability to:
| ● | accurately forecast our revenues and plan our operating expenses; |
| ● | successfully expand our business; |
| ● | assimilate our acquisitions; |
| ● | adapt to rapidly evolving trends in the ways consumers and businesses interact with technology; |
| ● | avoid interruptions or disruptions in the offering of our products and our services; |
| ● | develop a scalable, high-performance technology infrastructure that can efficiently and reliably handle increased usage, as well as the deployment of new features and products; |
| ● | hire, integrate and retain talented sales, customer service, technology and other personnel; and |
| ● | effectively manage rapid growth in personnel and operations; and |
| ● | global COVID-19 pandemic |
If the demand for our services and/or platforms/products offered or our products under development are not finalized, our business will be harmed. We may not be able to successfully address these risks and difficulties, which could harm our business and results of operations.
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OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT FOR US TO EVALUATE OUR FUTURE BUSINESS PROSPECTS AND MAKE DECISIONS BASED ON THOSE ESTIMATES OF OUR FUTURE PERFORMANCE.
We have a limited operating history and, as a consequence, it is difficult, if not impossible, to forecast our future results based upon our historical data. Reliance on the historical results may not be representative of the results we will achieve. Because of the uncertainties related to our limited historical operations, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in revenues or expenses. If we make poor budgetary decisions as a result of unreliable historical data, we could be less profitable or continue to incur losses.
THE COVID-19 OUTBREAK HAS CAUSED DISRUPTIONS IN OUR DEVELOPMENT OPERATIONS, WHICH HAVE RESULTED IN DELAYS ON EXISTING PROJECTS AND MAY HAVE ADDITIONAL NEGATIVE IMPACTS ON OUR OPERATIONS
The Company operates in a high-tech marketplace and relies on professionals and partnerships all over the world, which is impacted by the global pandemic, causing the Company’s resources to be affected. Our business operations have been and may continue to be materially and adversely affected by the coronavirus disease COVID-19.
An outbreak of respiratory illness caused by COVID-19 emerged in Wuhan city, Hubei province, PRC, in late 2019 and expanded globally. COVID-19 is considered to be highly contagious and poses a serious public health threat.
On March 19, 2020, California Governor Gavin Newsom issued a stay-at-home order to protect the health and well-being of all Californians and to establish consistency across the state in order to slow the spread of COVID-19. California was therefore under strict quarantine control and travel has been severely restricted, resulting in disruptions to work, communications, and access to files (due to limited access to facilities). Since then, other measures have been imposed in other countries and major cities in the USA, including Los Angeles, and throughout the world in an effort to contain the COVID-19 outbreak. The World Health Organization (the “WHO”) is closely monitoring and evaluating the situation. On March 11, 2020, the WHO declared the outbreak of COVID-19 a pandemic, expanding its assessment of the threat beyond the global health emergency it had announced in January. Any outbreak of such epidemic illness or other adverse public health developments in the USA or elsewhere in the world may materially and adversely affect the global economy, our markets and our business. The stay-at-home order was lifted in California on January 25, 2021, and as such we were able to relocate our virtual offices space and resume “normal” operations.
In the first quarter of 2020, the COVID-19 outbreak caused disruptions in our development operations, which resulted in delays on exiting projects. The State of California and the economy in general has begun to slowly re-open following the introduction of the COVID-19 vaccine. During the fourth quarter of 2021, the omicron variants surfaced and has significantly impacted the United States and globally. However, in the event COVID-19, the omicron variant or other variant is to worsen or again surface any further unforeseen delay in our operations of the development, delivery and assembly process within any of our activities could continue to result in, increased costs and reduced revenue.
We cannot foresee whether the outbreak of COVID-19 and its variants will continue to be effectively contained. If the outbreak of COVID-19 is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected as a result of the deteriorating market outlook for sales, the slowdown in regional and national economic growth, weakened liquidity and financial condition of our customers and vendors or other factors that we cannot foresee. Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations.
OUR RESULTS OF OPERATIONS HAVE NOT RESULTED IN PROFITABILITY AND WE MAY NOT BE ABLE TO ACHIEVE PROFITABILITY GOING FORWARD
The Company does not accrue or capitalize development costs (or any costs to this effect) and expense it to its profit and loss statements as required by US GAAP. As such, the Company incurred net loss of $17,771,626 for the year ended December 31, 2023. If we incur additional significant operating losses, our stock price, may decline, perhaps significantly. Our management is developing plans to alleviate the negative trends and conditions described above. Our business plan is speculative and unproven. There is no assurance that we will be successful in executing our business plan or that even if we successfully implement our business plan, that we will be able to curtail our losses now or in the future. Further, as we are an emerging enterprise, we expect that net losses will continue, and our working capital deficiency will increase.
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WE HAVE NOT GENERATED POSITIVE CASH FLOW FROM OPERATIONS, AND OUR ABILITY TO GENERATE POSITIVE CASH FLOW IS UNCERTAIN. IF WE ARE UNABLE TO GENERATE POSITIVE CASH FLOW OR OBTAIN SUFFICIENT CAPITAL WHEN NEEDED, OUR BUSINESS AND FUTURE PROSPECTS WILL BE ADVERSELY AFFECTED AND WE COULD BE FORCED TO SUSPEND OR DISCONTINUE OPERATIONS.
Our operations have not generated positive cash flow for any period since our inception, and we have funded our operations primarily through the issuance of common stock and short-term and long-term debt and convertible debt. Our limited operating history makes an evaluation of our future prospects difficult. The actual amount of funds that we will need to meet our operating needs will be determined by a number of factors, many of which are beyond our control. These factors include the timing and volume of sales transactions, the success of our marketing strategy, market acceptance of our products, the success of our manufacturing and research and development efforts (including any unanticipated delays), our manufacturing and labor costs, the costs associated with obtaining and enforcing our intellectual property rights, regulatory changes, competition, technological developments in the market, evolving industry standards and the amount of working capital investments we are required to make.
Our ability to continue to operate until we are able to generate sufficient our cash flow from operations will depend on our ability to generate sufficient positive cash flow from our operations. If we are unable to generate sufficient cash flow from our operations, our business and future prospects will be adversely affected and we could be forced to suspend or discontinue operations.
The Company sustained a net loss of $17,771,626 and our operating activities used in cash flows of $51,342 for the year ended December 31, 2023. The Company had a working capital deficit of $31,781,634, stockholders’ deficit of $31,074,133 and an accumulated deficit of $315,993,294 at December 31, 2023.
WE WILL REQUIRE ADDITIONAL CAPITAL TO SUPPORT BUSINESS GROWTH, AND THIS CAPITAL MIGHT NOT BE AVAILABLE ON ACCEPTABLE TERMS, IF AT ALL.
We intend to continue to make investments to support our business growth and we will require additional funds to respond to business challenges, including the need to develop new features and products or enhance our existing products, improve our operating infrastructure or acquire complementary businesses and technologies. Further, we need additional capital to continue operations. Accordingly, we need to engage in equity or debt financings to secure additional funds. We expect that we have sufficient capital sources to maintain operations through the year of 2024. In order to fully implement our business plan, we will need to raise about $12,000,000 If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing that we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be impaired, and our business may be harmed.
On December 17, 2021 (the “Effective Date”), the “Company entered into an equity financing agreement (the “Equity Financing Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with GHS Investments LLC (“GHS”), pursuant to which GHS may purchase from the Company, up to that number of shares of common stock of the Company (the “Shares”) for $10,000,000, subject to certain limitations and conditions set forth in the Equity Financing Agreement from time to time over the course of 24 months after an effective registration of the Shares with the Securities and Exchange Commission (the “SEC”) pursuant to the Registration Rights Agreement, is declared effective by the SEC (the “Contract Period”). The Equity Financing Agreement grants the Company the right, from time to time at its sole discretion (subject to certain conditions) during the Contract Period, to direct GHS to purchase shares of Common Stock on any business day (a “Put”), provided that at least ten trading days has passed since the most recent Put. The purchase price of the shares of Common Stock contained in a Put will be 90% of the lowest daily volume weighted average price (VWAP) of the Company’s Common Stock during the ten consecutive trading days preceding the receipt by GHS of the applicable Put notice. Such sales of Common Stock by the Company, if any, may occur from time to time, at the Company’s option, during the Contract Period. Subject to the satisfaction of certain conditions set forth in the Equity Financing Agreement,
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on each Put the Company will deliver a number of Shares equaling 110% of the dollar amount of each Put. The maximum dollar amount of each Put will not exceed 200% of the average daily trading dollar volume for the Company’s Common Stock during the 10 trading days preceding the Trading Day that GHS receives a Put. No Put will be made in an amount equaling less than $10,000 or greater than $500,000. Puts are further limited to GHS owning no more than 4.99% of the outstanding stock of the Company at any given time. The Equity Financing Agreement and the Registration Rights Agreement contain customary representations, obligations, rights, warranties, agreements and conditions of the parties. The Equity Financing Agreement terminates upon any of the following events: when GHS has purchased $10,000,000 in the Common Stock of the Company pursuant to the Equity Financing Agreement; on the date that is 24 calendar months from the date the Equity Financing Agreement was executed. Actual sales of shares of Common Stock to GHS under the Equity Financing Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. On January 12, 2022, the Company filed registration statement for the sale of 5,500,000 shares of common stock pursuant to the Equity Financing Agreement, which was declared effective on February 11, 2022. The Company issued 463,303 shares with net proceeds of $66,942 from the Equity Financing Agreement in February 2022.
For year ended December 31, 2022, the Company received $231,867 as proceeds from the equity purchase agreement for issuance of 5,500,000 registered common shares. Post this issuance The Equity Financing Agreement is exhausted and not valid anymore.
WE DEPEND UPON KEY PERSONNEL AND NEED ADDITIONAL PERSONNEL
Our success depends on our inability to attract and retain key personnel including, Mansour Khatib, our CEO, and Dr. Danny Rittman, our CTO, and our inability to do so may materially and adversely affect our business operations. The loss of qualified personnel could have a material and adverse effect on our business operations. Additionally, the success of the Company’s operations will largely depend upon its ability to successfully attract and maintain competent and qualified key management personnel. As with any company with limited resources, there can be no guaranty that the Company will be able to attract such individuals or that the presence of such individuals will necessarily translate into profitability for the Company.
OUR BUSINESS REQUIRES SUBSTANTIAL CAPITAL, AND IF WE ARE UNABLE TO MAINTAIN ADEQUATE CASH FLOWS FROM OPERATIONS OUR PROFITABILITY AND FINANCIAL CONDITION WILL SUFFER AND JEOPARDIZE OUR ABILITY TO CONTINUE OPERATIONS
We require substantial capital to support our operations. If we are unable to generate adequate cash flows from our operations, maintain adequate financing or other sources of capital are not available, we could be forced to suspend, curtail or reduce our operations, which could harm our revenues, profitability, financial condition and business prospects.
THERE IS CURRENTLY A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK. FAILURE TO FURTHER DEVELOP OR MAINTAIN A TRADING MARKET COULD NEGATIVELY AFFECT THE VALUE OF OUR COMMON STOCK AND MAKE IT DIFFICULT OR IMPOSSIBLE FOR YOU TO SELL YOUR STOCK.
There is a limited public market for our Common Stock, which is traded on the OTC PINK under the symbol GTCH. We cannot give any assurances that there will ever be a mature, developed market for our common stock. Failure to further develop or maintain an active trading market could negatively affect the value of our shares and make it difficult for you to sell your shares or recover any part of your investment in us. Even if a market for our common stock does develop in a material way, the market price of our common stock may be highly volatile. In addition to the uncertainties relating to our future operating performance and the profitability of our operations, factors such as variations in our interim financial results, or various, as yet unpredictable factors, many of which are beyond our control, may have a negative effect on the market price of our common stock.
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IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR PREVENT FRAUD. AS A RESULT, CURRENT AND POTENTIAL STOCKHOLDERS COULD LOSE CONFIDENCE IN OUR FINANCIAL REPORTING, WHICH WOULD HARM OUR BUSINESS AND THE TRADING PRICE OF OUR STOCK.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our brand and operating results could be harmed. We have in the past discovered, and may in the future discover, areas of our internal controls that need improvement. For example, for the years ended December 31, 2022 and 2021, we reported that our disclosure controls and procedures were not effective due to the lack of resources and the reliance on outside consultants. We intend to increase management’s review of our financials. We cannot be certain that these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
Additional Risks Related to Our Common Stock
Because we are quoted on the OTC PINK marketplace instead of a national securities exchange, our investors may experience significant volatility in the market price of our stock and have difficulty selling their shares.
Our Common Stock is currently quoted on the OTC Market Group’s OTC PINK marketplace under the ticker symbol “GTCH”. The OTC is a regulated quotation service that displays real-time quotes and last sale prices in over-the-counter securities. Trading in shares quoted on the OTC PINK is often thin and characterized by volatility. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume and market conditions. As a result, there may be wide fluctuations in the market price of the shares of our Common Stock for reasons unrelated to operating performance, and this volatility, when it occurs, may have a negative effect on the market price for our securities. Moreover, the OTC PINK is not a stock exchange, and trading of securities on this platform is more sporadic than the trading of securities listed on a national quotation system or stock exchange. Accordingly, our stockholders may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them for a substantial period of time until the market for our Common Stock improves.
Our stock price and trading volume may be volatile, which could result in substantial losses for our stockholders.
The equity trading markets may experience periods of volatility, which could result in highly variable and unpredictable pricing of equity securities. The market price of our Common Stock could change in ways that may or may not be related to our business, our industry or our operating performance and financial condition. In addition, the trading volume in our Common Stock has been low and may fluctuate and cause significant price variations to occur. We have experienced significant volatility in the price of our stock. In addition, the stock markets in general can experience considerable price and volume fluctuations.
We have not paid dividends in the past and have no immediate plans to pay cash dividends.
We plan to reinvest all of our earnings, to the extent we have earnings, to develop and deliver our products and cover operating costs and to otherwise become and remain competitive. We do not plan to pay any cash dividends with respect to our securities in the foreseeable future. We cannot assure you that we would, at any time, generate sufficient surplus cash that would be available for distribution to the holders of our Common Stock as a dividend. Therefore, you should not expect to receive cash dividends on our Common Stock.
Shares eligible for future sale may adversely affect the market for our Common Stock.
Of the 16,813,229,180 shares of our Common Stock outstanding as of the date of this Annual Report, approximately 766,217,939 are restricted and 16,047,011,241 shares are freely tradable without restriction pursuant to Rule 144. Any substantial sale of our Common Stock pursuant to Rule 144 or pursuant to any resale prospectus may have a material adverse effect on the market price of our Common Stock.
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You may experience future dilution as a result of future equity offerings.
To raise additional capital, we may in the future offer additional shares of our Common Stock or other securities convertible into or exchangeable for our Common Stock at prices that may not be the same as the price per share in this offering. We may sell shares or other securities in any future offering at a price per share that is lower than the price per share paid by investors in this offering, which would result in those newly issued shares being dilutive. In addition, investors purchasing shares or other securities in the future could have rights superior to existing stockholders, which could impair the value of your shares. The price per share at which we sell additional shares of our Common Stock, or securities convertible or exchangeable into shares of our Common Stock, in future transactions may be higher or lower than the price per share paid by investors in this offering.
Our charter documents and Nevada law may inhibit a takeover that stockholders consider favorable.
Provisions of our certificate of incorporation and bylaws and applicable provisions of Nevada law may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. The provisions in our certificate of incorporation and bylaws:
| ● | limit who may call stockholder meetings; |
| ● | do not provide for cumulative voting rights; and |
| ● | provide that all vacancies may be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum. |
There are limitations on director/officer liability.
As permitted by Nevada law, our certificate of incorporation limits the liability of our directors for monetary damages for breach of a director’s fiduciary duty except for liability in certain instances. As a result of our charter provision and Nevada law, shareholders may have limited rights to recover against directors for breach of fiduciary duty. In addition, our certificate of incorporation provides that we shall indemnify our directors and officers to the fullest extent permitted by law.
Penny stock regulations may impose certain restrictions on marketability of our securities.
The SEC adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5 per share or an exercise price of less than $5 per share, subject to certain exceptions. A security listed on a national securities exchange is exempt from the definition of a penny stock. Our Common Stock is not currently listed on a national security exchange. Our Common Stock is therefore subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by such rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market maker, the broker dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Broker-dealers must wait two business days after providing buyers with disclosure materials regarding a security before effecting a transaction in such security. Consequently, the “penny stock” rules restrict the ability of broker-dealers to sell our securities and affect the ability of investors to sell our securities in the secondary market and the price at which such purchasers can sell any such securities, thereby affecting the liquidity of the market for our Common Stock.
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Stockholders should also be aware that, according to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
| ● | control of the market for the security by one or more broker-dealers that are often related to the promoter or issuer; |
| ● | manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; |
| ● | “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; |
| ● | excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and |
| ● | the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses. |
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
The Financial Industry Regulatory Authority (referred to as FINRA) has rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative or low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA has indicated its belief that there is a high probability that speculative or low-priced securities will not be suitable for at least some customers. If these FINRA requirements are applicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our Common Stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item 1B. Unresolved Staff Comments. At this time, there are no unresolved staff comments.
ITEM 2. PROPERTIES
The Company leases its virtual office space at 8557 N West Knoll Dr. West Hollywood CA 90069 (prior address: 2450 Colorado Ave., Suite 100E, Santa Monica, CA 90404) on a month-to-month lease.
ITEM 3. LEGAL PROCEEDINGS
Legal Proceedings
From time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business. There is currently no litigation that management believes will have a material impact on the financial position of the Company.
Relate to 2022:
On or around January 30, 2019, RWJ Advanced Marketing, LLC, Greg Bauer, and Warren Jackson sued the Company and multiple third and related parties in Superior Court of the State of California - County of Los Angeles, General District in connection with the acquisition of UGO in September 2017. The case number is 19STCV03320 (the “Original Lawsuit”). The complaint in the Original Lawsuit alleges breach of contract, among other causes of action. The Company answered the complaint and filed a cross-complaint against the plaintiffs in the case and third parties on or around February 15, 2019. On or about September 10, 2020, the Company through its agent of service was “served” with a complaint (the Company contested service) that was recently filed against the Company and third parties by Robert Warren Jackson and Gregory Bauer in Los Angeles Superior Court Case No.: 20STCV32709 (“Second Lawsuit”). In the Original Lawsuit filed, the court rejected the plaintiff’s claims that they were filing a purported quasi-derivative lawsuit. As such, in this current litigation, the plaintiff is now again claiming the action is a derivative lawsuit. On October 13, 2020, the Second Lawsuit was removed by other defendants into Central District of California (CASE NO. 2:20−cv−09399−RGK−AGR). On February 2, 2021 the Central District of California dismissed the entire Second Lawsuit based on “demand futility”.
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In the Original lawsuit, the Company filed a cross complaint against the plaintiff and other third parties. Recently, the court has scheduled various hearings and a trial date set for December 27, 2021 which was later continued by the Court to September 28, 2022. It was the Company’s intention to dividend its holdings of its wholly owned subsidiary Ugopher services Corp. (“UGO”). As UGO is the main dispute in the litigations described above, the Company has elected to sell UGO to a third-party effective July 1, 2020. On September 17, 2020, the Company terminated Greg Bauer as consultant (resulting from the sale of UGO), which he confirmed in writing. On or about June 14, 2021 the Company stipulated with plaintiff that all third parties will be released and plaintiff may file a new first amendment complaint that will name only the Company. As such, all third parties other than prior transfer agent of the Company have been dismissed from this litigation. Following the sale of UGO, the Company noticed third parties (including SURG, via its asset manager) to wire the UGO funds to its new bank account. SURG never answered the notice. SURG is the clearing house for UGO. The Company noticed certain third parties that it intends to take legal actions to resolve this issue. On November 12, 2020 the Company filed a complaint in the United States District Court – District of Nevada - Case 2:20-cv-02078 against RWJ, Mr. Bauer, Mr. Jackson and against W.L. Petrey Wholesale Company Inc for fraud, breach of contract, Unjust Enrichment and other claims. On January 28, 2022 the court awarded the Company with injunction against RWJ defendants, where all fee funds generating from resale should be deposited into GBT blocked account, and therefore RWJ defendants cannot use these funds without court order. The Company entered into the Confidential Settlement Agreement and Mutual Release (“RJW Agreement”) by and between RWJ Advanced Marketing, LLC, Robert Warren Jackson, Gregory Bauer (collectively the “RJW Parties”) and W.L. Petrey Wholesale Company, Inc., (“Petrey”) on one hand; and GBT Technologies Inc., on behalf of itself and its agents (collectively the GBT Parties”), on the other hand. The Company the RJW Agreement effective September 26, 2022 with final signatures delivered to the Company on or about October 5, 2022. Pursuant to the RJW Agreement, the parties have agreed to settle, release, and otherwise resolve all known or unknown claims between them and agreed to jointly stipulate, move, or otherwise dismiss the lawsuits filed in the United States District Court of Nevada (Case No. 2:20-cv- 02078), in the Superior Court of the State of California, County of Los Angeles, Central District (Case Nos. 19STCV03320 and 20STCV32709), and in the United States District Court of the Central District of California (Case No. 2:20-cv-09399-RGK-AGR) with prejudice. The parties agreed and stipulated to release all funds currently being held in a blocked account of $19,809 with 50% distributed to the RWJ Parties and 50% distributed the Company or its assignee. The Parties also entered into the InComm Assignment Agreement (“IAA”) which assigned, transferred and conveyed all proceeds derived from the RWJ Parties’ agreements with Interactive Communications International, Inc., and its affiliate Hi Technology Corp., including but not limited to that Master Distribution and Service Agreement between Interactive Communications International, Inc. and Petrey d/b/a UGO-HUB dated August 29, 2016, as amended (collectively referred to as the “InComm Proceeds”), and which shall divide the InComm Proceeds 90% to the Company or its assignee and 10% to the RWJ Parties or their assignee. Finally, the Company agreed to pay $40,000 to the RWJ Parties or their assignee. The Company accrued $49,847 expenses represent the final amounts due to the RJW Parties. The Company under a different settlement agreement with SURG, committed to assign the IAA. As such, on October 5, 2022 and as cumulation of all settlement agreements the Company issued a request to SURG regarding release of certain escrow funds and the execution of an assignment of rights as contemplated in the aforereferenced agreement.
On December 3, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with Discover Growth Fund, LLC (the “Investor”) pursuant to which the Company issued a Senior Secured Redeemable Convertible Debenture (the “Debenture”) of $8,340,000. In connection with the issuance of the Debenture and pursuant to the terms of the SPA, the Company issued a Common Stock Purchase Warrant to acquire up to 225,000 shares of common stock for a term of three years (the “Warrant”) on a cash-only basis at an exercise price of $100 per share with respect to 50,000 Warrant Shares, $75 with respect to 75,000 Warrant Shares and $50 with respect to 100,000 Warrant Shares. The holder may not exercise any portion of the Warrants to the extent that the holder would own more than 4.99% of the Company’s outstanding common stock immediately after exercise. The outstanding principal amount may be converted at any time into shares of the Company’s common stock at a conversion price equal to 95% of the Market Price less $5 (the conversion price is lowered by 10% upon the occurrence of each Triggering Event – the current conversion price is 75% of the Market Price less $5.00). The Market Price is the average of the 5 lowest individual daily volume weighted average prices during the period the Debenture is outstanding. On May 28, 2019, the Investor delivered to the Company a “Notice of Default and Notice of Sale of Collateral” (the “Notice”). On December 23, 2019, in arbitration between the Company and the Investor, an Interim Award was entered in favor of the Investor. On January 31, 2020, the Company was informed that a final award was entered (the “Final Award”). The Final Award affirms that certain sections of the Debenture constitute unenforceable liquidated damages penalties and were stricken. Further, it was determined that the Investor was entitled to recovery of their attorney’s fees. Consequently, the arbitrator awarded Investor an award of $4,034,444 plus interest of 7.25% accrued from May 15,
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2019 and costs of $55,613. On February 18, 2020, the Company filed a motion with the United States District Court District of Nevada (the “Nevada Court”) to confirm the Final Award and a motion to consolidate Investor’s application to confirm the Final Award filed in the U.S. District Court of the Virgin Islands (Case No: 3 :20-cv-00012-CVG-RM) (the “Virgin Island Court”). On February 27, 2020, the Nevada Court denied the Company’s motion to confirm the Final Award and motion to consolidate and further decided that the confirmation of the Final Award should be litigated in the Virgin Island Court. As such, on February 27, 2020, the Company filed a Notice of Entry of Order as well as a Motion to Confirm the Arbitration Award, address the outstanding issues regarding whether Investor’s rights are subordinated to other creditors and, thereafter, oversee a commercially reasonable foreclosure sale (Case No: 3 :20-cv-00012-CVG-RM). It was the Company’s position that the Final Award must first be confirmed and all questions regarding the rights of Investor relative to those of other creditors must be determined before any foreclosure sale can proceed. It is further the position of the Company that the previously disclosed foreclosure sale scheduled by Investor is being conducted in a commercially unreasonable manner and that if Discover proceeded forward with the foreclosure sale it did so at its own risk. Nevertheless, on February 28, 2020, Investor advised that it conducted a sale of the Company’s assets. As the date of this report Investor failed to present a deed of sale for the alleged sale that allegedly took place as noticed. The Company filed with Virgin Island Court the motions disputing the validity of the alleged sale. On July 28, 2020, Investor filed in the State of Nevada a motion for attorneys $48,844 and costs $716. The Company filed an answer on August 11, 2020. On October 16, 2020, Investor motion for attorneys $48,844 and costs $716 was denied. This case is still pending with the Federal court and the Court has not taken any substantive action in the matter as of the date of this report. Based on Discover notice in writing of selling all the Company’s assets, the Company intend to invoice Discover for that sale and offset the settlement amount at the end of the year.
On January 25, 2024 Virgin Island Court ordered that Final Award is confirmed.
Relate to 2023:
On or about July 9, 2021 the Company filed a lawsuit in District Court in Clack County Nevada – Department 19 (Case number A-21-837631-C) against Terry Taylor and TTSG Holdings, Inc for breach of contract, breach of covenant of Good Faith and Fair Dealing, Unjust Enrichment and declaratory relief for failure of providing consulting services per contract they entered. The Company is demanding the return of 240,000 shares issued, return of the $5,000 payments, recission of the consulting agreement, and attorney’s fees and costs. As Terry Taylor and TTSG Holdings failed to appear to a notice of deposition, the Company filed for a summary judgment. On January 20, 2023 the court issued a $708,821 writ of execution against Terry Taylor and TTSG. As of filing date, the Company has not collected any amount issued by the Court from Terry Taylor and TTSG.
Stock Loan Receivable
On January 8, 2019, the Company entered into a Stock Pledge Agreement with Latin American Exchange Latinex Casa de Cambio, S.A., a Costa Rica corporation (“Latinex”), to provide that Latinex may maintain its required regulatory capital as required by various regulators. The Company pledged 4,006 restricted shares of its common stock valued at $7,610,147 (based on the closing price on the grant date) for three years for an annual payment of $375,000 paid in quarterly installments of $93,750. In lieu of cash payment, Latinex may pay the Company in virtual currency of WISE Network S.A. valued at a 50% discount of its offering price of $10 per token. In the event that Latinex’s required capital has decreased below $5,000,000, Latinex is permitted to sell the pledged shares of common stock only in an amount to ensure that Latinex can satisfy the required capital levels. The Company must consent to such sale of the shares of common stock, which may not be unreasonably withheld. Upon expiration of the agreement, the remaining shares of common stock shall be returned to the Company free and clear of all liens. The Company recorded the value of these shares of common stock as a stock loan receivable which is presented as a contra-equity account in the accompanying consolidated balance sheets. At December 31, 2019, the Company wrote off the accrued interest income as Latinex did not perform any payment and the Company has no mean to enforce this payment. Latinex agreed in principle to return the pledged 4,006 restricted shares to the Company for cancellation. The 4,006 restricted shares have not yet been returned to the Company as of December 31, 2023.
Metaverse Agreements
On June 10, 2022, the Company, entered into a Joint Venture and Territorial License Agreement (the “Metaverse Agreement”) with Ildar Gainulin and Maria Belova (collectively, the “Licensor”). Under the Metaverse Agreement, the parties formed Metaverse Kit Corp., a Nevada corporation (“Metaverse Kit”). The purpose of Metaverse Kit was to develop, maintain and support source codes for its proprietary technologies and comprehensive platform that combines a core virtual reality platform and an extended set of real-world functions to provide a metaverse experience initially within the area of sports and then expanding into virtual worlds of entertainment, live events, gaming,
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communications and other cross over product opportunities (the “Meta Portfolio”). Under the Metaverse Agreement, Licensor agreed to provide Metaverse Kit with the licensed technology and expertise. In connection therewith, the parties entered an Asset Purchase Agreement (the “Metaverse APA”) concurrently with the Metaverse Agreement whereby Licensor sold Metaverse Kit all source codes pertaining to the Meta Portfolio. Further, Licensor provided an exclusive license to Metaverse Kit throughout the world for the invented product/service and the related platforms relating to the Meta Portfolio and to use the know how to develop, manufacture, sell, market and distribute the Meta Portfolio throughout the world. The Company was required to contribute 500,000,000 shares of common stock of the Company (“GBT Shares”) to Metaverse Kit. Licensor and the Company were to each own 50% of Metaverse Kit. The Company pledged its 50% ownership in Metaverse Kit to Igor 1 Corp. to secure a convertible note held by Igor 1 Corp. The Company was to appoint two directors and Licensor was allowed to appoint one director of Metaverse Kit. In addition, Metaverse Kit, Licensor and Elentina Group, LLC (“Elentina”) entered into a Consulting Agreements in which IGBM and Elentina, each were engaged to provide services for $25,000 per month payable quarterly which Metaverse Kit has the option to pay in shares of common stock calculated by the amount owed divided by the Company’s 10-day VWAP. Licensor and Elentina were to provide services in connection with the development of the business as well as Metaverse Kit’s capital raising efforts. The term of the Consulting Agreement was two years. The closing of the Metaverse Agreement occurred on June 13, 2022.
On March 14, 2023, the Company received a counter signed Settlement Agreement and Release by Licensor dated March 2, 2023 (“Settlement Agreement”). Pursuant to the Settlement Agreement, the parties agreed that Metaverse Agreement, the Metaverse APA and the Consulting Agreement are void and cancelled. Licensor agreed to pay $5,000 to the Company as settlement payment and surrender their shares in Metaverse Kit.
ITEM 4. MINE SAFERY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
The Company is authorized to issue 30,000,000,000 of its $0.00001 par value common stock and 20,000,000 shares of its $0.00001 par value preferred stock Series B and 10,000 shares of its $0.00001 par value preferred stock Series C, 100,000 shares of its $0.00001 par value preferred Series D shares, 2,000,000 of its $0.00001 par value preferred Series G shares, 40,000 of its $0.00001 par value preferred Series H shares and 1,000 of its $0.00001 par value preferred Series I shares. As of December 31, 2023, 10,253,695,062 shares of common stock, as well as 45,000 shares of preferred stock Series B, 700 shares of preferred stock Series C, zero shares of preferred stock Series D, zero shares of preferred stock Series G, 20,000 shares of preferred stock Series H and 1,000 shares of preferred stock Series I were issued and outstanding. The Board of Directors reserves the right to issue shares of preferred stock in the future indicating preference or rights as appropriate.
Market Information
Our common stock commenced quotation on the OTC PINK under the symbol “GTCH”. The Company’s subsequent symbol was “GOPH”. The following table sets forth the range of high and low prices per share of our common stock for each period indicated (after given effect to reverse split of 1 for 100 split in 2019 and 1 for 50 in 2021)
| Quarters Ended | Mar 31 | Jun 30 | Sep 30 | Dec 31 | |||||||||||||||||||||||||||||
| High | Low | High | Low | High | Low | High | Low | ||||||||||||||||||||||||||
| 2022 | $ | 0.350 | $ | 0.107 | $ | 0.114 | $ | 0.002 | $ | 0.007 | $ | 0.001 | $ | 0.002 | $ | 0.001 | |||||||||||||||||
| 2023 | $ | 0.0006 | $ | 0.0004 | $ | 0.0003 | $ | 0.0002 | $ | 0.0002 | $ | 0.0001 | $ | 0.0002 | $ | 0.0001 | |||||||||||||||||
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Record Holders
The number of holders of record for our common stock as of December 31, 2023 was 94.
Dividends
The Company has not yet adopted any policy regarding payment of dividends. No cash dividends have been paid or declared since the Date of Inception.
Securities Authorized for Issuance Under Equity Compensation Plans
We presently do not have equity compensation plans authorized.
Transfer Agent
The Company transfer agent is Nevada Agency and Transfer Company (“NATCO”) with a business address at 50 West Liberty Street, Suite 880, Reno NV 89501; NATCO’s website is www.natco.com, and their phone number is (775) 322-0626.
Penny Stock
Our common stock is considered “penny stock” under the rules of the SEC under the Securities Exchange Act of 1934. The SEC adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5, other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market System, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that:
| ● | contains a description of the nature and level of risks in the market for penny stocks in both public offerings and secondary trading; |
| ● | contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities’ laws; contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; |
| ● | contains a toll-free telephone number for inquiries on disciplinary actions; |
| ● | defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and |
| ● | contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation. |
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with:
| ● | bid and offer quotations for the penny stock; |
| ● | the compensation of the broker-dealer and its salesperson in the transaction; |
| ● | the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the marker for such stock; and |
| ● | monthly account statements showing the market value of each penny stock held in the customer’s account. |
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In addition, the penny stock rules that require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.
Recent Issuances of Unregistered Securities
2022:
For the year ended December 31, 2022, the Company issued 222,091,971 shares of Company common stock upon the conversion of the convertible promissory note and accrued interest to 1800 Diagonal Lending.
For the year ended December 31, 2022, the Company issued 150,000,000 shares of Company common stock to GBT Tokenize for joint venture agreement between Magic International Argentina FC, S.L. The value of the shares of $1,500 was determined based on the FV of the Company’s common stock.
For the year ended December 31, 2022, the Company issued 5,500,000 shares of Company common stock to GHS from the Equity Financing Agreement for gross consideration of $231,868, The value of the shares of was determined based on the Equity Financing.
For the year ended December 31, 2022, the Company issued 500,000,000 shares of Company common stock to Metaverse for certain equity method investment. The value of the shares of $5,000 was determined based on the FV of the Company’s common stock.
For the year ended December 31, 2022, the Company issued 8,580,434 shares of Company common stock upon the conversion of the convertible promissory note and accrued interest to Stanley Hills.
For the year ended December 31, 2022, the Company issued 26,343,190 shares of Company common stock upon the conversion of the convertible promissory note and accrued interest to Redstart.
For the year ended December 31, 2022, the Company issued 590,117,647 shares of Company common stock upon the conversion of the convertible promissory note and accrued interest to IGOR Corp.
2023:
For the year ended December 31, 2023, the Company issued 1,003,997,711 shares of Company common stock upon the conversion of the convertible promissory note and accrued interest to 1800 Diagonal Lending.
For the year ended December 31, 2023, the Company issued 1,157,809,793 shares of Company common stock upon the conversion of the convertible promissory note and accrued interest to Stanley Hills.
For the year ended December 31, 2023, the Company issued 147,058,824 shares of Company common stock upon the conversion of the convertible promissory note and accrued interest to Glen Eagles.
For the year ended December 31, 2023, the Company issued 6,309,235,294 shares of Company common stock upon the conversion of the convertible promissory note and accrued interest to IGOR Corp.
Of 100,000,000 Shares issued to Pacific Capital Markets LLC for certain for service agreement between Pacific Capital Markets LLC. and the Company. The value of the shares of $80,000 was determined based on the FV of the Company’s common stock at the time of issuance.
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Series I Preferred Shares
On July 20, 2023, the Company through its wholly owned subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic and GBT Tokenize. The 2023 Tokenize Agreement restated and replaced the 2022 Tokenize Agreement. Pursuant to the 2023 Tokenize Agreement, as a result of the contribution of the Technology Portfolio by Tokenize and the subsequent contribution of services for the development of the Technology Portfolio by Tokenize and Magic, GBT Tokenize has been able to continue in operation, which has benefited the Company despite its contribution of 166 million shares of common stock valued at approximately $50,000. In order to maintain its 50% ownership interest in GBT Tokenize, the Company agreed to contribute its portfolio of intellectual property to GBT Tokenize and issue to GBT Tokenize 1,000 shares of Series I Preferred Stock (the “Series I Stock”) with a stated value of $35,000 per share which is convertible into common stock of the Company by dividing the stated value by the conversion price of $0.0035, which, if converted in full would result in the issuance of 10 billion shares of common stock of the Company. Further, the Series I Stock will vote on an as converted basis.
As of December 31, 2023, there are 1,000 shares of Series I Preferred Shares outstanding.
We claimed exemption from registration under the Securities Act for the sales and issuances of these securities under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, in that such sales and issuances did not involve a public offering. All of the purchasers of unregistered securities for which we relied on Section 4(a)(2) and/or Regulation D represented that they were accredited investors as defined under the Securities Act. We claimed such exemption on the basis that (a) the purchasers in each case represented that they intended to acquire the securities for investment only and not with a view to the distribution thereof and that they either received adequate information about the registrant or had access, through employment or other relationships, to such information and (b) appropriate legends were affixed to the stock certificates issued in such transactions.
ITEM 6. RESERVED
None.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion should be read in conjunction with our financial statements and related notes included elsewhere in this report. In addition to historical information, this discussion includes forward-looking information that involves risks and assumptions, which could cause actual results to differ materially from management’s expectations. See “Forward-Looking Statements” included in this report.
Forward-Looking Statements
This Annual Report on Form 10-K contains forward looking statements, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.
In some cases, you can identify forward-looking statements by terminology such as “may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘could,’’ ‘‘expects,’’ ‘‘plans,’’ ‘‘intends,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’ ‘‘potential,’’ or ‘‘continue’’ or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this Report.
This section of the report should be read together with Footnotes of the Company audited financials. The audited statements of operations for the years ended December 31, 2023 and 2022 are compared in the sections below.
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General Overview
GBT Technologies Inc. (the “Company”, “GBT”, or “GTCH”) was incorporated on July 22, 2009 under the laws of the State of Nevada. The Company via its 50% subsidiary, is targeting growing markets such as development of Internet of Things (IoT) and Artificial Intelligence (AI) enabled networking and tracking technologies, including wireless mesh network technology platform and fixed solutions, development of an intelligent human body vitals device, asset-tracking IoT, and wireless mesh networks. The Company technologies can be grouping as (i) the provision of IT consulting services; and (ii) from the licensing of its technology. (ii) from selling electronic products through e-commerce platforms. (iv) an advanced RF-based computer vision system, to utilize this platform potential to significantly enhance object detection and imaging capabilities, using radio waves to create detailed 2D and 3D images .On February 18, 2022 the Company, effective March 1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company shares revenues generated by Mahaser with respect to e-commerce sales through the online retail platform in the United States of America. Effective July 1, 2023, the Company agreed to terminate the RSA with Mahaser Ltd.
Recent Developments
Due to litigation with Discover Fund, in April 2020, GBT was forced to make the decision of changing the Company’s direction by developing a portfolio of intellectual property within the area of microchips technology and design. The years 2019 and 2020 were compounded with recuring legal issues and COVID-19 restrictions creating extremely difficult times and challenges. GBT focused on its core competency in the area of Research & Development (“R&D”) creating an IP portfolio combined of patents, trade secrets and prototypes further defining GBT’s new mission. GBT is now developing IP in areas which will leverage its competencies and experience with the goal of diversifying in various fast-growing semiconductor industries in today’s leading, growing market segments.
As described in Part I; Item 1, On July 20, 2023, the Company through Greenwich, entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize Corp (“GBT Tokenize”). Via vis this 2023 Tokenize Agreement, GBT will focus on expanding the families of various patents and concentrating on strategic potential partnerships with the goal of integrating these technologies into a broad marketplace, one that will potentially diversify the risk within these areas:
| 1. | Build a portfolio pipeline of IP related to microchip technology. |
| 2. | Seek to actively introduce this new technology to strategic partners, large companies and VC’s creating market opportunities. |
| 3. | Using market diversification to create access to new fields and future growth. |
GBT Tokenize Joint Venture - 2023 Tokenize Agreement
The 2023 Tokenize Agreement restated and replaced the 2022 Tokenize Agreement. Pursuant to the 2023 Tokenize Agreement, as a result of the contribution of the Technology Portfolio by Tokenize and the subsequent contribution of services for the development of the Technology Portfolio by Tokenize and Magic, GBT Tokenize has been able to continue in operation. On November 2, 2023, the Company received a notice of completion (notice # 508205896) of the recoding of assignment for its portfolio of intellectual property to GBT Tokenize. The assignment was recorded by the assignment recording branch of the U.S. Patent and Trademark Office. A complete copy of this assignment is available at the assignment branch room on the reel and frame number 065420/0434 (in total 16 pages).
Active Investments:
VisionWave:
Effective as of March 19, 2024, Tokenize, the Company entered into a Patent Purchase Agreement with VisionWave Technologies Inc. (“VisionWave”) pursuant to which VisionWave agreed to acquire from Tokenize the entire right, title, and interest of certain patents and patent applications providing an intellectual property basis for a machine learning driven technology that controls radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary and in motion objects (“VisionWave PPA”). The Purchase Price for the asset is $30,000,000 (the “Purchase Price”),
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which VisionWave will pay with shares of common stock, $0.0001 par value per share (the “Common Stock”). The Parties agree that the final Purchase Price may be adjusted and will be governed by a valuation report issued by a professional third party (“Valuation”). If the final Purchase Price per the Valuation is less than $30,000,000, Tokenize has the option to cancel this Agreement. In accordance therewith, VisionWave agreed to issue and deliver to Tokenize, 1,000 shares of Common Stock (the “Shares”) representing 50% of VisionWave’s issued and outstanding shares of Common Stock, where the remainder of the 50% of VisionWave’s issued and outstanding shares of Common Stock are owned by a corporation controlled by a third party.
Avant Investment:
On April 3, 2023, Tokenize entered into an Asset Purchase Agreement (“APA”) with Avant Technologies, Inc (prior name: Trend Innovation Holdings, Inc. “AVAI”), in which GBT consented, pursuant to which Tokenize sold certain assets relating to proprietary system and method named Avant-Ai, which is a text-generation, deep learning self-training model (the “System”). In consideration of acquiring the System, AVAI is required to issue to the Seller 26,000,000 common shares of AVAI (the “Shares”). The Shares been pledge to a third party as a collateral. In addition, AVAI, Tokenize and GBT entered into a license agreement regarding the System, granting Tokenize and/or GBT a perpetual, irrevocable, non-exclusive, non-transferable license for using the System to be used in its own development, as in-house tool, where Tokenize or GBT may not sublicense its rights hereunder to any customer or client.
MetAlert:
On April 12, 2022, Tokenize, entered into a series of agreements with GTX Corp (“GTX”) and various note holders of GTX pursuant to which Tokenize acquired a convertible promissory note of GTX of $100,000 (the “GTX Notes”). In addition, GBT Tokenize acquired 76,923 (GBT acquired 5,000,000 in the original deal, where GTX to perform a corporate action of 1:65 reverse split on September 20, 2022) shares of common stock of GTX for $150,000 - in total FV of $8,846 as of June 30, 2023 based on level 1 stock price in OTC markets.
The GTX Notes bear 10% interest and 50% of the principal may be converted into shares of common stock on a one-time basis at a conversion price of $0.01 per share. The remaining 50% of the principal must be paid in cash. The closing occurred on April 12, 2022. As of December 31, 2023, the Company wrote off the 50% of the convertible principal with all unpaid interest in total of $65,613 due to the collectability issue.
GTX changed its name into Metalert Inc. on or about September 20, 2022.
On September 30, 2022, GBT Tokenize, loaned MetAlert Inc., a Nevada corporation (f/k/a GTX Corp.) (“MetAlert”) $90,000. For such loan, MetAlert provided Tokenize a promissory note of $90,000 which is due and payable together with interest of 5% upon the earlier of September 19, 2023 or when declared by Tokenize. As of December 31, 2023, the Company wrote off the entire of the convertible principal with all unpaid interest in total of $95,770 due to the collectability issue.
MetAlert designs, manufactures and sells various interrelated and complementary products and services in the wearable technology and IoMT (Internet of Medical Things) marketplace.
On or about January 31, 2023 GTB Tokenize Corp the Company’s 50% owned subsidiary, assigned $7,500 from the GTX Notes to Stanley Hills, LLC, which in turn converted said $7,500 plus interest into 812,671 GTX shares. Stanley Hills, LLC credit GBT Tokenize for $146,037 for the transaction, reducing its credit outstanding balances with the Company and GBT Tokenize Corp.
As of December 31, 2022, the notes had an outstanding balance of $190,000 and accrued interest of $8,475. As of December 31, 2023, the notes had an outstanding balance of $46,250 and accrued interest of $0.
MetAlert designs, manufactures and sells various interrelated and complementary products and services in the wearable technology and IoMT (Internet of Medical Things) marketplace.
On or about January 31, 2023 Tokenize, assigned $7,500 from the GTX Notes to Stanley Hills, LLC, which in turn converted said $7,500 plus interest into 812,671 GTX shares. Stanley Hills, LLC credit GBT Tokenize for $146,037 for the transaction, reducing its credit outstanding balances with the Company and GBT Tokenize Corp.
Wireless mesh networking:
Wireless mesh networks consist of LAN/MAN/WAN solutions that are infrastructural-intensive, may rely on regulated frequencies and bandwidth, often have so-called “last mile” problems areas where either economics or population density make it too expensive for current solutions to cover, and difficult to manage centrally. The Company’s GopherInsight platform makes it easy to add and manage last mile capacity. The solution is easily integrated into existing networks. The Company’s AI platform is designed for easy integration with, and management of, additional coverage for customer networks.
Wireless mesh networking markets - The Company potentially will target telecommunications providers, corporate entities that run LAN or wide-area networks, universities, and government entities.
Wireless mesh networking markets competition - The competitors for wireless mesh networking solutions, and AI solutions, are the entities themselves that have their own capability. The Company’s strategy is to integrate and “wrap around” those solutions to make them more efficient, less costly, and less infrastructural-intensive, while at the same time solving last mile problems to the end user.
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COVID-19 Pandemic
The Company operates in a high-tech marketplace and relies on professionals and partnerships all over the world, which is impacted by the global pandemic, causing the Company’s resources to be affected. Our business operations have been and may continue to be materially and adversely affected by the coronavirus disease COVID-19. An outbreak of respiratory illness caused by COVID-19 emerged in Wuhan city, Hubei province, PRC, in late 2019 and has been expanding globally. COVID-19 is considered to be highly contagious and poses a serious public health threat. On March 19, 2020, California Governor Gavin Newsom issued a stay-at-home order to protect the health and well-being of all Californians and to establish consistency across the state in order to slow the spread of COVID-19. California was therefore under strict quarantine control and travel has been severely restricted, resulting in disruptions to work, communications, and access to files (due to limited access to facilities). Since then, other measures were imposed in other countries and major cities in the USA, including Los Angeles, and throughout the world in an effort to contain the COVID-19 outbreak. The World Health Organization (the “WHO”) is closely monitoring and evaluating the situation. On March 11, 2020, the WHO declared the outbreak of COVID-19 a pandemic, expanding its assessment of the threat beyond the global health emergency it had announced in January. Any outbreak of such epidemic illness or other adverse public health developments in the USA or elsewhere in the world may materially and adversely affect the global economy, our markets and our business. The stay-at-home order was lifted in California only on January 25, 2021. In the first quarter of 2020, the COVID-19 outbreak has caused disruptions in our development operations, which have resulted in delays on exiting projects. A prolonged disruption or any further unforeseen delay in our operations of the development, delivery and assembly process within any of our activities could continue to result in, increased costs and reduced revenue.
We cannot foresee whether the outbreak of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact. If the outbreak of COVID-19 is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected as a result of the deteriorating market outlook for sales, the slowdown in regional and national economic growth, weakened liquidity and financial condition of our customers and vendors or other factors that we cannot foresee. Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations.
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic on the Company and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.
In October 2023, the Hamas Terror Organization attacked the Southern part of Israel, which in turn, commenced a military action with Gaza Strip. As a result, these actions, have created and are expected to create global economic consequences. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.
Consideration of Inflation Reduction Act Excise Tax
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
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Investment Company Act 1940
Under the current rules and regulations of the SEC we are not deemed an investment company for purposes of the Investment Company Act; however, on March 30, 2022, the SEC proposed new rules (the “Proposed Rules”) relating, among other matters, to the circumstances in which SPACs such as the Company could potentially be subject to the Investment Company Act and the regulations thereunder. The Proposed Rules provide a safe harbor for companies from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that a company satisfies certain criteria.
The Investment Company Act defines an investment company as any issuer which (i) is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities; (ii) is engaged or proposes to engage in the business of issuing face-amount certificates of the installment type, or has been engaged in such business and has any such certificate outstanding; or (iii) is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of Government securities and cash items) on an unconsolidated basis.
Results of Operations:
Years ended December 31, 2023 and 2022
A comparison of the statements of operations for the year ended December 31, 2023 and 2022 is as follows:
| Years Ended December 31, | Change | |||||||||||||||
| 2023 | 2022 | $ | % | |||||||||||||
| Consulting income | — | 90,000 | (90,000 | ) | (100 | %) | ||||||||||
| Total Sales | — | 90,000 | (90,000 | ) | (100 | %) | ||||||||||
| Cost of sales | — | — | — | — | % | |||||||||||
| Gross Profit | — | 90,000 | (90,000 | ) | (100 | %) | ||||||||||
| General and administrative expenses | 507,261 | 701,270 | (410,372 | ) | (28 | %) | ||||||||||
| Marketing expenses | 237,428 | 360,335 | (122,907 | ) | (34 | %) | ||||||||||
| Professional expenses | 995,532 | 1,785,908 | (735,376 | ) | (44 | %) | ||||||||||
| Loss (income) from operations | (1,740,221 | ) | (2,757,513 | ) | (1,178,655 | ) | (37 | %) | ||||||||
| Other expense (income), net | (15,993,020 | ) | 8,122,346 | (24,158,540 | ) | (297 | %) | |||||||||
| Loss (income) before provision for income taxes | (17,733,241 | ) | 5,364,833 | (22,979,885 | ) | (431 | %) | |||||||||
| Provision for income taxes | — | — | — | — | ||||||||||||
| Loss (income) from continued operations | (17,733,241 | ) | 5,364,833 | (22,979,885 | ) | (431 | %) | |||||||||
| Discontinued operations | (38,385 | ) | (40,978 | ) | 2,593 | (6 | %) | |||||||||
| Net loss (income) | $ | (17,771,626 | ) | $ | 5,323,856 | $ | (22,977,292 | ) | (434 | %) | ||||||
The Consulting income for both the years ended December 31, 2023 and 2022 was $0 and $90,000. Sales are derived from providing IT consulting services and the services were terminated in 2023.
Operating expenses for the year ended December 31, 2022 were $1,740,221, compared to $2,847,513 for the same period in 2022. The decrease of $1,107,292 or 37% was principally due to no impairment of assets, decrease in marketing expenses of $122,907, decrease in general and administrative expenses of $410,372, and decrease in professional expenses of $735,376 for the year ended December 31, 2022.
Other expense for the year ended December 31, 2023 was $15,993,020, an decrease of $24,158,540 or 297% from $8,122,346 for the same period in 2022. The decrease is principally due to i) a increase of licensing income of $49,590; ii) reduction of amortization of debt discounts by $119,314; iii) reduction of change in FV of derivative liability by $20,353,852; iv) reduction in interest expense and financing costs of $1,612,185; and v) gain on debt settlement of $315,297.
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Net loss for the year ended December 31, 2023 was $17,771,626 compared to the net income of $5,323,856 for the same period in 2022 due to the factors described above.
Liquidity and Capital Resources
Going Concern
The accompanying CFS have been prepared assuming the Company will continue as a going concern. The Company has an accumulated deficit of $315,993,294 and has a working capital deficit of $31,781,634 as of December 31, 2023, which raises substantial doubt about its ability to continue as a going concern.
The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through some private placement offerings of debt and equity securities. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These CFS do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Our cash was $529 and $13,058 at December 31, 2023 and 2022, respectively. Cash used in operating activities during the year ended December 31, 2023 was $51,341, compared to $231,874 used in operating activities during the same period in 2022. The amount used in operating activities for the year ended December 31 2022 was primarily related to a net income of $5,323,856 and offset by amortization of debt discount of $362,011, excess of debt discount and financing costs of $34,175, change in FV of derivative liability of $2,795,870, change in FV of market equity security of $290,538, gain on debt settlement of $3,012,633, and net working capital increase of $3,199,627. Our working capital position changed by going from a working capital deficit of $18,522,046 at December 31, 2022 to a working capital deficit of $31,781,634 at December 31, 2023.
The amount used in operating activities for the year ended December 31, 2023 was primarily related to a net loss of $17,771,626 offset by amortization of debt discount of $322,933, excess of debt discount and financing costs of $1,462,446, change in FV of derivative liability of $13,759,482, gain on debt extinguishment of $315,297, loss on loss of control of $38,385, shares issued for services of 80,000, change in fair value of market equity security of $10,992, and net working capital deficit increase of $13,259,588.
Cash flows used in investing activities were $0 during the year ended December 31, 2023, compared to $275,000 for the same period in 2022. The decrease is due to no investment in marketable securities during the year ended December 31, 2023.
Cash from financing activities for the year ended December 31, 2023 was $38,813, compared to $364,826 for the same period in 2022. The increase is due to the issuance of convertible notes in 2023 of $113,260 and issuance of notes payable of $106,616, which is offset by the repayment of notes payable of $79,070 and repayment of related party of $27,375 and a repayment of convertible note of $39,043. Cash from financing activities for the year ended December 31, 2022 was due to the issuance of convertible notes and related party in 2022 of $1,056,227 and proceeds from sales of common stock of $231,865 offset with the issuance of notes receivable of $190,000 and repayments to related party of $694,225.
We obtained a net loss of $17,771,626 for the year ended December 31, 2023. In addition, we had a working capital deficit of $31,781,634 and accumulated deficit of $315,993,294 at December 31, 2023.
$10,000,000 for GBT Technologies S. A. acquisition
In accordance with the acquisition of GBT-CR the Company issued a convertible note in the principal amount of $10,000,000. The convertible note bears interest of 6% and is payable at maturity on December 31, 2021. At the election of the holder, the convertible note can be converted into a maximum of 20,000 shares of Series H Preferred Stock. Each share of Series H Preferred Stock is convertible, at the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($500 per share). This convertible note may convert into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price with a 20-day look back immediately preceding the date of conversion and therefore recorded as derivative liability. On May 19,
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2021, the Company, Gonzalez, GBT-CR and IGOR 1 Corp entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of outstanding balance plus accrued interest (the “Gonzalez Agreement”). Pursuant to the Gonzalez Agreement, without any party admission of liability and to avoid litigation, the parties had agreed to (i) extend the GBT convertible note maturity date to December 31, 2022, (ii) amend the GBT convertible note terms to include a beneficial ownership blocker of 4.99% and a modified conversion feature to the GBT convertible note with 15% discount to the market price during the 20 trading day period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT convertible note by Gonzalez to a third party. As a result of the change in terms of this convertible note, the Company took a charge related to the modification of debt of $13,777,480 during the year ended December 31, 2021. This convertible note is recorded as derivative liability because of the discounted price on conversion.
During the period ended December 31, 2023, IGOR 1 converted $1,182,535 of the convertible note into 6,309,235,294 shares of the Company’s common stock.
As of December 31, 2023, the note had an outstanding balance of $5,175,496 and accrued interest of $2,358,241.
Paid Off Notes/Converted Notes
Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC -
On May 5, 2022, the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor (“DL”), pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Note”) of $244,500 for $203,500. The DL Note had a maturity date of August 4, 2023 and the Company had agreed to pay interest on the unpaid principal balance of the DL Note at 6.0% from the date on which the DL Note is issued (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the DL Note at any time from the Issue Date and continuing through 180 days following the Issue Date, provided it makes a payment including a prepayment premium to DL as set forth in the DL Note. The transactions described above funded on May 9, 2022.
The outstanding principal amount of the DL Note may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an Event of Default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.
Unless the Company shall have first delivered to DL, at least 48 hours prior to the closing of any equity (or debt with an equity component) financing in an amount less than $150,000 (“Future Offering”), written notice describing the proposed Future Offering and providing the Buyer an option during the 48 hour period following delivery of such notice to DL the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering then the Company is restricted from conducting the Future Offering during the period beginning on the Issue Date and ending nine months following the Issue Date.
During the period ended March 31, 2023, the entire balance of convertible note of $114,100 plus accrued interest of $7,335 was converted into 367,004,026 shares of common stock.
Convertible Note - On September 13, 2022, the Company entered into a Securities Purchase Agreement (dated September 9, 2022) with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) of $116,200 with an original issue discount of $12,450 resulting in net proceeds of the Company of $103,750. The DL Note had a maturity date of September 9, 2023 and the Company had agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 12.0% from the date on which the DL Note is issued (the “Issue Date”). A one-time interest charge of 12% or $13,944 was applied on the Issue Date to the principal amount owed under the DL Note. Accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in ten payments of $13,014.40 resulting in a total payback to DL of $130,144. The first payment is due October 30,
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2022 with nine subsequent payments each month thereafter. The Company shall have a five-day grace period with respect to each payment. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. This DL Note shall not be secured by any collateral or any assets of the Company. The outstanding principal amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 75% of the lowest trading price with a 10-day look back immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.
During the period ended June 30, 2023, the company paid back $39,043 to 1800 Diagonal lending and the remaining convertible note balance been converted into 136,993,684 shares.
As of December 31, 2023, the note had an outstanding balance of $0 and an interest of $0.
Outstanding Notes
Glen Eagle
The Company entered into a series of loan arrangements with Glen Eagles Acquisition LP pursuant to which it received $512,500 in loans (the “Debt”) from August 2021 up to September 2022. The original funded amount of $457,500 included convertible feature into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion.
In order to include a convertible feature for the $55,000 which was not covered by convertible feature, on January 24, 2023, the Company issued a consolidated convertible promissory note to Glen Eagles Acquisition LP in the principal amount of $512,500, which include all prior convertible notes with addition of the $55,000 straight note. The convertible promissory note bears interest of 10% and is payable at maturity on December 31, 2023. Glen Eagles Acquisition LP may convert the consolidated convertible Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion. The Company recorded a loss on debt extinguishment of $92,737 at the issuance date.
As of December 31, 2023, the consolidated convertible note had an outstanding balance of $462,500 and an interest of $106,072.
Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC
Straight Note – with Convertible Feature - On March 1, 2023, the Company entered into a Securities Purchase Agreement, with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) of $59,408 with an original issue discount of $6,258 resulting in net proceeds of the Company of $53,150. The DL Note had a maturity date of June 1, 2024 and the Company had agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 12.0% from the date on which the DL Note is issued. A one-time interest charge of 12% or $7,128 was applied on the issuance date of the DL Note to the principal amount owed under the DL Note. Accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in ten payments of $6,654 resulting in a total payback to DL of $66,536. The first payment is due April 15, 2023 with nine subsequent payments each month thereafter. The Company shall have a five-day grace period with respect to each payment. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. This DL Note shall not be secured by any collateral or any assets of the Company.
The outstanding principal amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 75% of the lowest trading price during the 10 day period immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to affect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.
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As of December 31, 2023, the note had an outstanding balance of $1,486 and a one-time interest charge of $7,129.
Convertible Note - On March 1, 2023, the Company entered into a Securities Purchase Agreement with DL pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Convertible Note”) of $62,680 for a purchase price of $52,150. The DL Convertible Note had a maturity date of June 1, 2024 and the Company had agreed to pay interest on the unpaid principal balance of the DL Convertible Note at the rate of 6.0% from the date on which the DL Convertible Note is issued until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the DL Convertible Note, provided it makes a payment including a prepayment to DL as set forth in the DL Convertible Note.
The outstanding principal amount of the DL Convertible Note may not be converted prior to the period beginning on the date that is 180 days following the date the DL Convertible Note is issued. Following the 180th day, DL may convert the DL Convertible Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Convertible Note), the DL Convertible Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Convertible Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.
During the period ended December 31, 2023, 1800 Diagonal converted $42,500 of the convertible note into 500,000,000 shares of the Company’s common stock.
As of December 31, 2023, the note had an outstanding balance of $20,180 and accrued interest of $6,041.
Straight Note $47,208 - On April 24, 2023, the Company entered into a Securities Purchase Agreement, with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) in the aggregate principal amount of $47,208 with an original issue discount of $5,058 resulting in net proceeds of the Company of $42,150. The DL Note has a maturity date of April 24, 2024 and the Company has agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 12.0% per annum from the date on which the DL Note is issued (the “Issue Date”). A one-time interest charge of 12% or $5,664 was applied on the Issue Date to the principal amount owed under the DL Note. Accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in ten payments each in the amount of $5,287.20 resulting in a total payback to DL of $52,872. The first payment is due June 15, 2023 with nine subsequent payments each month thereafter. The Company shall have a five-day grace period with respect to each payment. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. This DL Note shall not be secured by any collateral or any assets of the Company.
The outstanding principal amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 75% of the lowest trading price with a 10-day look back immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to affect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.
As of December 31, 2023, the note had an outstanding balance of $26,059 and a one-time interest charge of $5,665.
Convertible Note $50,580 - On April 24, 2023, the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Note”) in the aggregate principal amount of $50,580 for a purchase price of $42,150. The DL Note has a maturity date of July 24, 2024 and the Company has agreed to pay interest on the unpaid principal balance of the DL Note at the rate of six percent (6.0%) per annum from the date on which the DL Note is issued (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the DL Note, provided it makes a payment including a prepayment to DL as set forth in the DL Note.
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The outstanding principal amount of the DL Note may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price with a 20-day look back immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an Event of Default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.
As of December 31, 2023, the note had an outstanding balance of $50,580 and accrued interest of $3,966.
Stanley Hills LLC
The Company entered into a series of loan agreements with Stanley Hills LLC (“Stanley”) pursuant to which it received more than $1,000,000 in loans (the “Debt”) from May 2019 up to December 2019. On February 26, 2020, in order to induce Stanley to continue to provide funding, the Company and Stanley entered into a letter agreement providing that the current note payable balance due to Stanley of $1,214,900 may be converted into shares of common stock of the Company at a conversion price equal to 85% multiplied by the lowest one trading price for the common stock during the 20-trading day period ending on the latest complete trading day prior to the conversion date. Since the conversion price will vary based on the Company’s stock price, the beneficial conversion feature associated with this note is accounted for as a derivative liability. Stanley had agreed to restrict its ability to convert the Debt and receive shares of common stock such that the number of shares of common stock held by it and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. During the year ended December 31, 2021, Stanley converted $1,231,466 of its convertible note plus interest into 4,420,758 shares of the Company’s common stock, and during the year ended December 31, 2021, Stanley loaned the Company an additional $325,000. Also, during the year ended December 31, 2021, the Company transferred the SURG shares received as repayment of $800,000 of this convertible note and also converted $126,003 of accrued interest into the principal balance. During the year ended December 31, 2021, Gonzalez assigned all his accrued balances of $424,731 to Stanley in a private transaction that the Company is not part to (See Note 10). On January 2, 2023, the Company issued a convertible promissory note to Stanley for its credit balances in the principal amount of $750,000. The convertible promissory note bears interest of 10% and is payable at maturity on June 30, 2024. Stanley may convert the consolidated convertible Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion. The Company recorded a gain on debt extinguishment of $408,034 at the issuance date.
As of December 31, 2023 and December 31, 2022 the principal balance of Stanley debt is $661,395 and $116,605 respectively. The unpaid interest of the Stanley debt at December 31, 2023 and December 31, 2022 was $49,482 and $20,033, respectively.
SBA Loan
On June 22, 2020, the Company received a loan from the Small Business Administration under the Economic Injury Disaster Loan program related to the COVID-19 relief efforts. The loan bears interest at 3.75%, requires monthly principal and interest payments of $731 after 12 months from funding and is due 30 years from the date of issuance. The monthly payments have been extended by the SBA to all EIDL borrowers with additional 12 months. Monthly payments will be commenced on or around June 16, 2022. On October 1, 2021, the Company entered an Amended Loan Authorization and Agreement with the SBA providing for the modification of the Original Note providing for monthly principal and interest payments of $1,771 after 24 months from the Original Note commencing on or around June 22, 2022. On March 17, 2022 the SBA notified it deferred the payments to all COVID-19 EIDL loans will have the first payment due extended from 24-months to 30-months from the date of the note. The Modified Note will continue to bear interest at 3.75% and is due 30 years from the date of issuance of the Original Note. The Modified Note is guaranteed by Douglas Davis, the former CEO of the Company and current consultant, as well as by GBT Tokenize Corp. The additional funding of $200,000 was received by the Company on October 5, 2021.
The balance of the note at December 31, 2023 and at December 31, 2022 was $350,000 and $350,000 plus accrued interest of $36,832 and $23,707, respectively. The Company did not perform any payment on the loan and seeking hardship from the SBA for reduce payment which was not yet addressed by the SBA.
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Alpha Eda
On November 15, 2020, the Company issued a promissory note to Alpha Eda, LLC (“Alpha”), a related party for $140,000. The note accrues interest at 10%, is unsecured and was due on 30, 2021. On March 31, 2023 Alpha and the Company extended the note maturity to December 31, 2023.
The balance of the note at December 31, 2023 and at December 31, 2022 was $140,000 and $140,000 plus accrued interest of $46,633 and $32,633, respectively.
Accrued Settlement
In connection with a legal matter filed by the Investor of the $8,340,000 Senior Secured Redeemable Convertible Debenture, - See PART I; Item 3. The Company recorded accrued settlement of $4,090,057 and $4,090,057 at December 31, 2023 and at December 31, 2022, respectively. As the Investor claim in writing that it sold all the Company assets, management decided to issue the Investor an invoice against his Final Award at the end of the 2023 year and offset this liability.
Stanley Hills LLC Accounts Payable
As of December 31, 2023 and 2022, the Company has recorded an outstanding payable to Stanley of $835,933 and $927,136, respectively, recorded under accrued expenses.
Consulting income for both the years ended December 31, 2023 and 2022 were $0 and $90,000. Consulting income are derived from providing IT consulting services.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies and Use of Estimates
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of our financial statements in accordance with U.S. GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amount of assets and liabilities as of the date of the financial statements, the reported amounts and classification of revenues and expenses during the periods presented, and the disclosure of contingent assets and liabilities. We evaluate our estimates and assumptions on an ongoing basis and material changes in these estimates or assumptions could occur in the future. Changes in estimates are recorded on the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances and at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily-apparent from other sources. Actual results may differ materially from these estimates if past experience or other assumptions do not turn out to be substantially accurate.
We believe that the accounting policies described below are critical to understanding our business, results of operations, and financial condition because they involve significant judgments and estimates used in the preparation of our financial statements. An accounting is deemed to be critical if it requires a judgment or accounting estimate to be made based on assumptions about matters that are highly uncertain, and if different estimates that could have been used, or if changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our financial statements. Other significant accounting policies, primarily those with lower levels of uncertainty than those discussed below, are also critical to understanding our financial statements. The notes to our financial statements contain additional information related to our accounting policies and should be read in conjunction with this discussion.
Presentation of Financial Statements
The accompanying financial statements have been prepared in accordance with U.S. GAAP.
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Stock Split
On October 26, 2021, the Company effectuated a 1 for 50 reverse stock split. The share and per share information has been retroactively restated to reflect this reverse stock split.
Marketable Equity Securities
The Company accounts for marketable equity securities in accordance with ASC Topic 321, Investments – equity securities. Marketable equity securities are reported at FV based on quotations available on securities exchanges with any unrealized gain or loss being reported as a component of other income (expense) on the statement of operations. The portion of marketable equity security expected to be sold within twelve months of the balance sheet date is reported as a current asset. These publicly traded equity securities are valued using quoted prices and are included in Level 1.
Revenue Recognition
Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on January 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. The Company had no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying CFS for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.
Revenue is recognized under Topic 606 as follows:
| ● | executed contracts with the Company’s customers that it believes are legally enforceable; |
| ● | identification of performance obligations in the respective contract; |
| ● | determination of the transaction price for each performance obligation in the respective contract; |
| ● | allocation the transaction price to each performance obligation; and |
| ● | recognition of revenue only when the Company satisfies each performance obligation. |
These five elements, as applied to each of the Company’s revenue category, is summarized below:
| ● | IT consulting services – revenue is recorded on a monthly basis as services are provided; and |
| ● | License fees and Royalties – revenue is recognized based on the terms of the agreement with its customer. |
E-Commerce sales – (relate to interim reporting as this segment was discontinued)
| ● | Identify the contract(s) with a customer. ASC 606 defines a contract as “an agreement between two or more parties that creates enforceable rights and obligations”. Since this is an e-commerce sale on the Amazon of eBay websites, the Company just followed the general terms on Amazon or eBay websites and the customer entered into a contract with the Company based on the product listed on the Amazon or eBay websites; |
| ● | Identify the performance obligations in the contract. According to the contract, the Company is responsible for operation exclusively. The Company is entitled to all revenue which is being paid by Amazon or eBay into a designated bank account and the Company is responsible for all product acquisitions as well as shipments. The only performance obligations were the electronic products that were listed on Amazon or eBay websites and the Company determined each order is one single obligation; |
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| ● | Determine the transaction price. The transaction price set to be the listed price on the Amazon or eBay websites.; |
| ● | Allocation the transaction price to the performance obligations in the contract.; and |
| ● | Recognize revenue when the Company satisfies a performance obligation. Sales are being recognized upon shipment. |
Unearned revenue
Unearned revenue represents the net amount received for the purchase of products that have not seen shipped to the Company’s customers. On January 28, 2022 awarded the Company with injunction against RWJ Defendants, where all fee funds generating from resale should be deposited into GBT blocked account, and therefore RWJ Defendants cannot use these funds without court order - $19,810 been credited as unearned revenue until court final decision. The Company has $0 and $48,921 of unearned revenue at December 31, 2023 and December 31, 2022, respectively.
Contract liabilities
On February 22, 2022, the Company entered into an Intellectual Property License and Royalty Agreement with Touchpoint Group Holdings, Inc. (“Touchpoint” or “TGHI”) pursuant to which the Company granted TGHI a worldwide license for its technologies for five years in the domains of Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies pertaining to the Company’s digital currency technology (the “Technology”). GBT will charge TGHI royalties based on actual uses by TGHI of the Technology resulting from revenue attributable to the use, performance or other exploitation of the Technology, to the extent applicable, after deducting any taxes that the Company may be required to collect, and deducting any international sales, goods and services, value added taxes or similar taxes which the Company is required to pay, if any, excluding deductions for taxes on the Company net income. TGHI agreed to issue the Company 10,000,000 shares of common stock of TGHI in the FV of $50,000 as a onetime fee for the Company entering this Intellectual Property License and Royalty Agreement, which was booked contract liabilities and amortized over the five-year term. The Company has yet to earn any royalty income in relation to this agreement as of September 30, 2023. The contract liabilities as of September 30, 2023 and December 31, 2022 was $0 and $41,444, respectively.
On or about May 10, 2023 TGHI filed with the SEC Form 15 choosing to become a non-reporting entity. As such the Company void its entire contract liability with TGHI.
Derivative Financial Instruments
The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its FV and is then re-valued at each reporting date, with changes in the FV reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of December 31, 2023, the Company’s only derivative financial instrument was an embedded conversion feature associated with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage of the Company’s stock price at the date of conversion.
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their FV due to their short maturities.
FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the FV of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines FV, and establishes a three-level valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
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| ● | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| ● | Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the FV measurement. |
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.
For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as a financial instrument, and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
The Company uses Level 2 inputs for its valuation methodology for derivative liabilities as their FV were determined by using the Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect FV at each period end, with any increase or decrease in the FV being recorded in results of operations as adjustments to FV of derivatives.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented and its current on all its tax filings federal and state until 2021 inclusive.
Dividends
The Company has not yet adopted any policy regarding payment of dividends. No cash dividends have been paid or declared since the Date of Inception.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 appears at Page F-1, which appears after the signature page to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
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ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain a system of disclosure controls and procedures (as defined in Securities Exchange Act Rule 15d-15I) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive and Financial Officer) to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer (Principal Executive and Financial Officer), carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, our management concluded that our disclosure controls and procedures are not effective in timely alerting management to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer (Principal Executive and Financial Officer) to allow timely decisions regarding required disclosure.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management, consisting of our Chief Executive Officer (Principal Executive and Financial Officer), is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f), is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and includes those policies and procedures that:
| ● | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
| ● | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
| ● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use of disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, ICFR reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Our management assessed the effectiveness of our ICFR reporting as of December 31, 2023. Based on this assessment, management believes that as of December 31, 2023, our ICFR reporting is not effective based on those criteria.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC to provide only management’s report in this annual report.
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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes during our last fiscal year that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None of our directors or executive
officers
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers and Directors
Below are the names and certain information regarding the company’s executive officers and directors.
Current Directors/Officers:
| Name | Age | Title | ||
| Dr. Danny Rittman | 62 | Chief Technology Officer and Director | ||
| Mansour Khatib | 62 | Chief Executive Officer, Chief Financial Officer and Director |
Dr. Danny Rittman is a veteran software architect and integrated circuit technology expert with over 20 years of experience in the technology sector. From 2014 through the present, Dr. Rittman served as the CTO and as a director of the Company, leading the Company’s technological direction and managing teams of mobile software developers. From 2012, through 2014, Dr. Rittman served as a Senior Integrated Circuit Consultant for Qualcomm / Max Linear, managing teams of integrated circuit designers within the mobile technology arena. From 2007 through 2012, Dr. Rittman served as the Founder and CTO of Micrologic Design Automation, leading the company’s technological direction, including architecture, design and development of EDA software tools. From 2002 through 2007, Dr. Rittman served as an Integrated Circuit CAD / Software Senior Consultant for IBM, managing IC back-end projects and leading back-end CAD and QA software tool development and implementation. From 1995 through 2002, Dr. Rittman served as the Founder and VP of R&D for Bind-key Technologies, leading the company’s technological direction, research and development of EDA software tools for integrated circuits and back-end design. Dr. Rittman received a BS in Electrical Engineeri–g - VLSI Design from the University of Bridgeport, graduating Magna Cum Laude in 1992; a MS in Computer Scien–e - VLSI Design, specializing in Automation Algorithms, from La Salle University, graduating Magna Cum Laude in 1996; and a PhD in Computer Science VLSI Design, specializing in EDA Concepts and Algorithms, from La Salle University, graduating Summa Cum Laude in 1998. Mr. Rittman is the Company’s CTO and director.
Mansour Khatib was appointed as the Company Chief Executive and Financial Officer on April 13, 2020, the Company’s Board of Directors appointed Mansour Khatib, who served as the Chief Marketing Officer and a director of the Company as Chief Executive Officer. Mr. Khatib has also previously served as Interim Chief Executive Officer from May 2018 to July 2018. From 2009 through 2012, Mansour Khatib served as the CEO and CFO of The Merchandise Company, located in Long Beach, California. From 2012 through the present, Mr. Khatib has served as a U.S. Business and Marketing Sales Representative for KB Racking, located in Toronto, Canada. From May 2013 through July 2014, Mr. Khatib served as VP of Marketing for Sun Energy Partners, LLC, developing solar rooftop projects. From July 2014 through the present, Mr. Khatib has served as the CTO for New Energy Ventures, LLC, a company that is developing utility scale projects in New Jersey, California, and smaller projects in Mexico, the Caribbean and Peru. Mr. Khatib received B.A. in Economics from Fachhochschule Wuppertal in Wuppertal, Germany in 1988 and a Bachelors in Electro Engineering & Computer Technology from University Aachen in Aachen, Germany in 1985. Mr. Khatib is the Company’s CEO and director.
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Family Relationships
There are no family relationships among our directors and executive officers. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer. None of our directors or executive officers have had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant, exceeding $120,000.
Involvement in Certain Legal Proceedings
To our knowledge, during the last ten years, none of our directors and executive officers has:
| ● | Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. |
| ● | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. |
| ● | Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. |
| ● | Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. |
| ● | Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Corporate governance
On December 17, 2015, the Company established a Nominating and Corporate Governance Committee, a Compensation Committee and an Audit Committee (collectively, the “Committees”) and approved and adopted charters to govern each of the Committees.
Currently, there are no members on each of the committees and the board of directors has assumed the roles of each of the committees.
Agreements with Officers and Directors
On June 30, 2015, the Company appointed Dr. Danny Rittman as Chief Technical Officer and a board member. On April 6, 2018, the Company and Danny Rittman, Chief Technology Officer and a Director of the Company, agreed to amend his employment agreement pursuant to which he will receive salary at the rate of $250,000 annually payable in equal increments of $15,000 per month. An additional $70,000 shall be payable within 15 days of the end of the calendar year. On September 14, 2018, the Company and Dr. Rittman entered into a letter agreement confirming that the Company is the owner of all intellectual property developed by Dr. Rittman relating to the Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies, including a global platform with both mobile and fixed solutions, commencing June 16, 2015 and continuing until Dr. Rittman’s employment agreement is terminated. On August 1, 2021, the Company and Danny Rittman, Chief Technology Officer and a Director of the Company, agreed to amend his employment agreement pursuant to which he will receive salary at the rate of $5,000 per month.
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On April 16, 2016 (the “Effective Date”), Mansour Khatib and the Company entered into an Employment Agreement (the “Agreement”) pursuant to which Mr. Mansour Khatib agreed to serve as the Chief Marketing Officer of the Company. Mr. Mansour Khatib was also appointed as a director of the Company on the Effective Date. Pursuant to the terms of the Employment Agreement, Mr. Khatib will receive an annual salary of $100,000 upon the Company generating $1,000,000 in revenue during any three (3) month period. There is no understanding or arrangement between Mr. Khatib and any other person pursuant to which he was appointed as an executive officer and director. Mr. Khatib does not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or an executive officer. Mr. Khatib has not had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant, exceeding $120,000.
Effective August 15, 2016, the Employment Agreement of Mansour Khatib, our CMO, was amended and restated as follows:
Upon the Company generating $1,000,000 in revenue during any three (3) month period (the “Threshold Requirement”), the Executive will receive salary at the rate of $100,000 annually (the “Base Salary”); provided, however, that that Company shall pay to Executive $5,000 per month (the “Monthly Salary Advance”) commencing on August 15, 2016, which such Monthly Salary Advance shall be an advance on the Base Salary and shall continue to be paid to Executive until such time that the Company launches its Guardian Patch technology into the consumer markets. Once the Threshold Requirement is met, the Base Salary will be payable in equal increments not less often than monthly in arrears and in any event consistent with the Company’s payroll policy and practices. On August 1, 2021, the Company amend his employment agreement pursuant to which he will receive salary at the rate of $5,000 per month.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s executive officers, directors, and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of the Company’s common stock. Such officers, directors, and persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms that they file with the SEC.
To our knowledge, based solely on review of the copies of such reports and amendments to such reports with respect to the year ended December 31, 2023 filed with the SEC, all required Section 16 reports under the Exchange Act for our directors, executive officers, principal accounting officer and beneficial owners of greater than 10% of our common stock were filed on a timely basis during the year ended December 31, 2023.
Code of Ethics
We have adopted a Code of Ethics that applies to all officers, directors and employees. The Company will provide to any person without charge a copy of such code of ethics upon written request to the Company at its registered offices.
ITEM 11. EXECUTIVE COMPENSATION
The following tables set forth all compensation paid to our officers for the years ended December 31, 2023 and 2022.
Summary Compensation Table
| Name and principal | Stock Equity | None Equity Incentive | All Other | |||||||||||||||||
| Position | Year | Awards | Salary | Compensations | Total | |||||||||||||||
| Danny Rittman | 2023 | $ | — | $ | 60,000 | $ | — | $ | 60,000 | |||||||||||
| Chief Technology | ||||||||||||||||||||
| Officer and director | 2022 | $ | — | $ | 60,000 | $ | 3,671 | $ | 63,671 | |||||||||||
| Mansour Khatib | 2023 | $ | — | $ | 60,000 | $ | — | $ | 60,000 | |||||||||||
| Chief Executive | ||||||||||||||||||||
| Officer and director | 2022 | $ | — | $ | 60,000 | $ | 140,000 | $ | 200,000 | |||||||||||
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The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer.
There are no other stock option plans, retirement, pension, or profit-sharing plans for the benefit of our sole officer and director other than as described herein.
Director Compensation
During the years ended December 31, 2023 and 2022, there were 2 non-employee directors.
Outstanding Equity Awards at Fiscal Year-End
As of December 31, 2023, no new warrants were awarded to the executives.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the beneficial ownership of the Common Stock as of April 15, 2024 by (i) each person known by the Company to own beneficially more than 5% of the outstanding Common Stock; (ii) each director of the Company; (iii) each officer of the Company and (iv) all executive officers and directors as a group. Except as otherwise indicated below, each of the entities or persons named in the table has sole voting and investment powers with respect to all shares of Common Stock beneficially owned by it or him as set forth opposite its or his name.
| Common | Percentage | |||||||
| Stock | of | |||||||
| Beneficially | Common | |||||||
| Name of Beneficial Owner | Owned (1) | Stock (1) | ||||||
| Dr. Danny Rittman (2) | 1,980 | 0.00 | % | |||||
| Mansour Khatib (2) | — | 0.00 | % | |||||
| Metaverse Kit Corp (3) | 500,000,000 | 2.97 | % | |||||
| GBT Tokenize Corp (4) | 166,000,000 | 0.99 | % | |||||
| All Officers and Directors as a Group | 1,980 | 0.0 | % | |||||
| (1) | Beneficial ownership is determined in accordance with the Rule 13d-3(d)(1) of the Exchange Act, as amended and generally includes voting or investment power with respect to securities. Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table. The above is based on 16,813,229,180 shares of common stock outstanding as of April 15, 2024 |
| (2) | Current Officer and Director of the Company. |
| (3) | Metaverse Kit Corp was a 50/50 Joint venture between the Company and ldar Gainulin and Maria Belova. which was assigned on June 10, 2022 to ldar Gainulin and Maria Belova. The company contributed 500,000,000 share of the common stock to Metaverse Kit. On March 14, 2023, the Company received a counter signed Settlement Agreement and Release by ldar Gainulin and Maria Belova dated March 2, 2023 (“Settlement Agreement”). Pursuant to the Settlement Agreement, the parties agreed that Metaverse Agreement, the Metaverse APA and the Consulting Agreement are void and cancelled. ldar Gainulin and Maria Belova agreed to pay $5,000 to the Company as settlement payment and surrender their shares in Metaverse Kit. |
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| (4) | GBT Tokenize Corp is a 50/50 Joint venture between the Company and Tokenize-It S.A. which was assigned on June 30, 2021 to Magic International Argentina F.C, S.L. Controlled by Sergio Fridman, a third party GBT Tokenize Corp hold 16,000,000 shares of the Company’s common stock. On April 11, 2022 the company, through its own subsidiary, Greenwich International Holdings, entered into a Master Joint Venture and Territorial License Agreement (the “Tokenize Agreement”) with Magic which replaced a prior joint venture entered between the parties, per which GBT Tokenize Corp to hold an additional 150,000,000 shares of the Company’s common stock. In addition, GBT Tokenize is the holder of 1,000 shares of Series I Preferred Stock (the “Series I Stock”) with a stated value of $35,000 per share which is convertible into common stock of the Company by dividing the stated value by the conversion price of $0.0035, which, if converted in full would result in the issuance of 10 billion shares of common stock of the Company. Further, the Series I Stock will vote on an as converted basis |
No Director, executive officer, affiliate or any owner of record or beneficial owner of more than 5% of any class of voting securities of the Company is a party adversary to the Company or has a material interest adverse to the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
On October 10, 2019, the Company entered into a Joint Venture Agreement (the “BitSpeed Agreement”) with BitSpeed LLC, which is owned by Douglas Davis, the prior Company’s Chief Executive Officer (From January 1, 2019 to April 11, 2020), to form GBT BitSpeed Corp., a Nevada company (“GBT BitSpeed”). The purpose of GBT BitSpeed is to develop, maintain and support its proprietary Extreme Transfer Software Application Concurrency, a software application to transfer secure, accelerated transmission of large file data over networks, and connection to cloud storage, Network-Attached Storage (NAS) and Storage Area Networks (SANs) (“Concurrency”). BitSpeed shall contribute the services and resources for the development of Concurrency to GBT BitSpeed. The Company shall contribute 10 million shares of common stock of the Company to GBT BitSpeed. BitSpeed and the Company will each own 50% of GBT BitSpeed. The Company shall appoint two directors and BitSpeed shall appoint one director of GBT BitSpeed. In addition, GBT BitSpeed and Mr. Davis entered into a Consulting Agreement in which Mr. Davis (which was the Company’s EO from January 1, 2019 until April 11, 2020) is engaged to provide services for $10,000 per month payable quarterly which may be paid in shares of common stock calculated by the amount owed divided by the Company’s 20-day VWAP. Mr. Davis will provide services in connection with the development of the business as well as GBT BitSpeed’s capital raising efforts. The term of the Consulting Agreement was two years. The closing of the BitSpeed Agreement occurred on October 14, 2019. On March 31, 2023 Doug Davis gave notice to the Company of termination of the consulting agreement dated October 10, 2019.
On July 20, 2023, the Company through its wholly owned subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize Corp (“GBT Tokenize”). On March 6, 2020, the Company through Greenwich entered into a Joint Venture and Territorial License Agreement (the “2020 Tokenize Agreement”) with Tokenize-It, S.A. (“Tokenize”). Under the 2020 Tokenize Agreement, the parties formed GBT Tokenize and Tokenize contributed its technology portfolio as described in the 2020 Tokenize Agreement with each Tokenize and the Company owning 50% of GBT Tokenize. The purpose of GBT Tokenize is to develop, maintain and support source codes for its proprietary technologies including advanced mobile chip technologies, tracking, radio technologies, AI core engine, electronic design automation, mesh, games, data storage, networking, IT services, business process outsourcing development services, customer service, technical support and quality assurance for business, customizable and dedicated inbound and outbound calls solutions, as well as digital communications processing for enterprises and start-ups (“Technology Portfolio”).
In addition to the Technology Portfolio, Tokenize contributed the services and resources for the development of the Technology Portfolio to GBT Tokenize. The Company contributed 2,000,000 shares of common stock. On May 28, 2021, the parties agreed to amend the 2020 Tokenize Agreement to expand the territory granted for the Technology Portfolio under the license to GBT Tokenize to include the entire continental United States. The Company issued GBT Tokenize an additional 14,000,000 shares of common stock. On June 30, 2021, Tokenize and its shareholder assigned all their rights under the 2020 Tokenize Agreement, including the Company’s pledged 50% ownership in GBT Tokenize to Magic. On April 11, 2022, the Company, through Greenwich, entered into a Master Joint Venture and Territorial License Agreement (the “2022 Tokenize Agreement”) with Magic and Tokenize which replaced the 2020 Tokenize Agreement. The Company issued GBT Tokenize an additional 150,000,000 shares of common stock of the Company. GBT Tokenize has developed a vital device based on the Technology Portfolio that is ready for commercialization,
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as well as certain derivative technologies, which positioned GBT Tokenize to further develop or license certain code sources. On April 3, 2023, GBT Tokenize entered its first commercial transaction to date through the sale of the Avant-AI! technology that been developed by GBT Tokenize, based on the Technology Portfolio pursuant to which GBT Tokenize received 26,000,000 shares of common stock of Buyer’s shares – Avant Technologies, Inc. The 2023 Tokenize Agreement restated and replaced the 2022 Tokenize Agreement. Pursuant to the 2023 Tokenize Agreement, as a result of the contribution of the Technology Portfolio by Tokenize and the subsequent contribution of services for the development of the Technology Portfolio by Tokenize and Magic, GBT Tokenize has been able to continue in operation, which has benefited the Company despite its contribution of 166 million shares of common stock valued at approximately $50,000. In order to maintain its 50% ownership interest in GBT Tokenize, the Company agreed to contribute its portfolio of intellectual property to GBT Tokenize and issue to GBT Tokenize 1,000 shares of Series I Preferred Stock (the “Series I Stock”) with a stated value of $35,000 per share which is convertible into common stock of the Company by dividing the stated value by the conversion price of $0.0035, which, if converted in full would result in the issuance of 10 billion shares of common stock of the Company. Further, the Series I Stock will vote on an as converted basis. The Company pledged its 50% ownership in GBT Tokenize and its 100% ownership of Greenwich to Magic to secure its Technology Portfolio investment.
VisionWave:
On March 19, 2024, Tokenize, the Company entered into a Patent Purchase Agreement with VisionWave Technologies Inc. (“VisionWave”) pursuant to which VisionWave agreed to acquire from Tokenize the entire right, title, and interest of certain patents and patent applications providing an intellectual property basis for a machine learning driven technology that controls radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary and in motion objects (“VisionWave PPA”). The Purchase Price for the asset is $30,000,000 (the “Purchase Price”), which VisionWave will pay with shares of common stock, $0.0001 par value per share (the “Common Stock”). The Parties agree that the final Purchase Price may be adjusted and will be governed by a valuation report issued by a professional third party (“Valuation”). If the final Purchase Price per the Valuation is less than $30,000,000, Tokenize has the option to cancel this Agreement. In accordance therewith, VisionWave agreed to issue and deliver to Tokenize, 1,000 shares of Common Stock (the “Shares”) representing 50% of VisionWave’s issued and outstanding shares of Common Stock, where the remainder of the 50% of VisionWave’s issued and outstanding shares of Common Stock are owned by a corporation controlled by Stanley Hills.
Avant Investment:
On April 3, 2023, Tokenize entered into an Asset Purchase Agreement (“APA”) with Avant Technologies, Inc (prior name: Trend Innovation Holdings, Inc. “AVAI”), in which GBT consented, pursuant to which Tokenize sold certain assets relating to proprietary system and method named Avant-Ai, which is a text-generation, deep learning self-training model (the “System”).
In consideration of acquiring the System, AVAI is required to issue to the Seller 26,000,000 common shares of AVAI (the “Shares”). The Shares been pledge to a third party as a collateral.
In addition, AVAI, Tokenize and GBT entered into a license agreement regarding the System, granting Tokenize and/or GBT a perpetual, irrevocable, non-exclusive, non-transferable license for using the System to be used in its own development, as in-house tool, where Tokenize or GBT may not sublicense its rights hereunder to any customer or client.
Yello Partners Inc.
As of December 31, 2023 and as of December 31, 2022, the Company has $625,000 and $505,000 owed to Yello Partners, Inc., a Company owned by the CEO.
Alpha Eda Note Payable – Related Party
On November 15, 2020, the Company issued a promissory note to Alpha Eda, LLC (“Alpha”), a related party, for $140,000. The note accrues interest at 10%, is unsecured and was due on September 30, 2021. On March 31, 2023 Alpha and the Company extended the note maturity to December 31, 2023.
42
Stanley Hills LLC Convertible Note Payable (relate to 2022)
On January 1, 2023, the Company issued a convertible promissory note to Stanley for its credit balances in the principal amount of $750,000. The convertible promissory note bears interest of 10% and is payable at maturity on June 30, 2024. Stanley may convert the consolidated convertible Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion.
As of December 31, 2023, the Company has recorded an outstanding payable balance to Stanley amounted $661,395.
Consulting income for the period ended December 31, 2023 and for the year ended on December 31, 2022 were $0 and $90,000. Consulting income were derived from providing IT consulting services to Stanley Hills.
As of December, 31, 2023 and December 31, 2022, the Company has recorded a due to related party of $14,239 and $62,003, respectively.
On February 9, 2022 the Board approved the employment of Ms. Rittman the spouse of Mr. Rittman, as an assistant to be paid $1,500 per month. Mr. Rittman recuse himself from voting on the matter due to a conflict.
Procedures for Approval of Related Party Transactions
Our Board of Directors is in charged with reviewing and approving all potential related party transactions. All such related party transactions must then be reported under applicable SEC rules. We have not adopted other procedures for review, or standards for approval, of such transactions, but instead review them on a case-by-case basis.
Director Independence
The Company has no outside directors as of December 31, 2023.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table shows the fees that were billed for the audit and other services provided by Madhava Rao and BF Borgers CPA PC for the years ended December 31, 2023 and 2022.
| Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Audit Fees | $ | 92,500 | $ | 84,161 | ||||
Audit Fees - This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
Board of Directors Pre-Approval Process, Policies and Procedures
All audit and permissible non-audit services provided by our independent registered public accounting firm must be pre-approved. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of service. The independent registered public accounting firm and management periodically report to the board of directors regarding the extent of services provided by the independent registered public accounting firm. Consistent with the board of directors’ policy, all audit and permissible non-audit services provided by our independent registered public accounting firm were pre-approved by our board of directors.
43
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
44
45
| (1) | Incorporated by reference to the Form S-1 Registration Statement filed with the SEC on September 9, 2009. |
| (2) | Incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 6, 2011 |
| (3) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on May 14, 2012 |
| (4) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 27, 2012. |
| (5) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on November 20, 2012. |
| (6) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on February 18, 2015 |
| (7) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 12, 2015 |
| (8) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 1, 2015 |
| (9) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on June 16, 2015 |
| (10) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 21, 2015 |
| (11) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 20, 2016 |
| (12) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 20, 2016 |
| (13) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 30, 2017 |
| (14) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 7, 2017 |
| (15) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on January 3, 2018 |
| (16) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 21, 2018 |
| (17) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 18, 2018 |
| (18) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 26, 2018. |
| (19) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 9, 2018. |
| (20) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 18, 2018. |
| (21) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on June 19, 2019. |
| (22) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on July 12, 2019. |
| (23) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on July 15, 2019. |
| (24) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 5, 2019. |
| (39) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 7, 2019. |
| (25) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 16, 2019. |
| (26) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 25, 2019. |
| (27) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 2, 2020. |
| (28) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 11, 2020. |
46
| (29) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 24, 2020. |
| (30) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 10, 2020. |
| (31) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 21, 2021. |
| (32) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on June 1, 2021. |
| (33) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 23, 2021. |
| (34) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 29, 2021. |
| (35) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 6, 2021. |
| (36) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on November 11, 2021 |
| (37) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 20, 2021 |
| (38) | Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 28, 2021 |
| (39) | Incorporated by reference to the Form S-1 Registration Statement filed with the Securities and Exchange Commission on January 12, 2022 |
Item 16. Form 10-K Summary.
None
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GBT TECHNOLOGIES INC. | ||
| Dated: August 19, 2024 | By: | /s/ Mansour Khatib |
| Name: | Mansour Khatib | |
| Title: | Chief Executive and Financial Officer (Principal Executive, Financial and Accounting Officer) | |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.
| Signature | Title | Date | ||
| /s/ Mansour Khatib | Chief Executive & financial Officer & Director | August 19, 2024 | ||
| Mansour Khatib | (Principal Executive, Financial and Accounting Officer) | |||
| /s/ Dr. Danny Rittman | Chief Technology Officer and Director | August 19, 2024 | ||
| Dr. Danny Rittman | ||||
48
GBT TECHNOLOGIES INC.
Consolidated Financial Statements
Contents
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the board of directors of GBT Technologies, Inc.
GBT Technologies Inc.
2450 Colorado Ave., Suite 100E,
Santa Monica, CA 90404
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of GBT Technologies, Inc. the “Company”) as of December 31, 2023 and 2022, the related statement of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has accumulated deficit of $ 315,993,294 as of December 31, 2023 and has incurred recurring operating losses. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
F-2
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The company is involved in significant litigation related to debt settlement. The company has complex derivative instruments that require fair value measurement and accounting for potential liabilities. Company liabilities for legal $4,090,057 and derivative $14,116,062 is recorded and shown separately under current liabilities.
The audit team identified the litigation and derivative liability as critical audit matters due to their materiality and complexity, requiring significant auditor attention and judgment.
1. Litigation Assessment: We assessed the company’s litigation disclosures, legal opinions, and potential outcomes. Our audit procedures included, among others, obtaining a list of litigation Company’s legal counsel, identifying material litigations from the aforementioned list and performing inquiries with the said counsel, obtaining and reading the underlying documents to assess the assumptions used by management in arriving at the conclusions, verifying the disclosures related to provisions and contingent liabilities in the financial statements to assess consistency. Accrued settlements discussed in Note 13.
Considering the judgement involved in determining the need to make a provision or disclose litigation, the matter is considered a Critical Audit Matter
2. Derivative Liability Valuation: The auditors performed detailed testing of the fair value measurement of derivative instruments. This included evaluating the valuation models used, assessing market inputs, and considering the impact of potential liabilities on the company’s financial statements.
Convertible notes payable discussed in Note 11 have a conversion price that can be adjusted based on the Company’s stock price which results in the conversion feature being recorded as a derivative liability. The Company uses a weighted average Black-Scholes option pricing model with the following assumptions to measure the FV of derivative liability in Note 14. The outcome fair value of derivative liabilities could have a significant impact on the company’s financial statements and disclosures. We focused on ensuring the accuracy and completeness of these key financial statement elements.
Considering the calculation using valuation model used in determining the need to make provision is a matter considered a Critical Audit Matter.
We conclude that the litigation and derivative liability met the criteria for being critical audit matters due to their materiality, complexity, and the level of judgment and estimation involved in their assessment.
April 19, 2024
Served as Auditor since 2022
5041
F-3
GBT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
| ASSETS | December 31, | December 31, | ||||||
| 2023 | 2022 | |||||||
| (Audited) | (Audited/As Restated*) | |||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid | ||||||||
| Note receivable | ||||||||
| Marketable securities | ||||||||
| Current assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable – Related Party | ||||||||
| Accrued settlement | ||||||||
| Unearned revenue | ||||||||
| Contract liabilities | ||||||||
| Convertible
notes payable, current, net of discount of $ | ||||||||
| Convertible
notes payable, related party, net of discount of $ | ||||||||
| Notes
payable, current, net of original issue discount of $ | ||||||||
| Notes payable, related party | ||||||||
| Due to related party | ||||||||
| Derivative liability | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Non-Current Liabilities: | ||||||||
| Note
payable, noncurrent, net of discount of $ | ||||||||
| Total noncurrent liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ Deficit: | ||||||||
| Series B Preferred stock, $par value; shares authorized; and shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | ||||||||
| Series C Preferred stock, $par value; shares authorized; and shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | ||||||||
| Series D Preferred stock, $par value; shares authorized; and shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | ||||||||
| Series G Preferred stock, $par value; shares authorized; and shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | ||||||||
| Series H Preferred stock, $par value ($500 stated value); shares authorized; and shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | ||||||||
| Series I Preferred stock, $ par value ($35,000 stated value); shares authorized; and shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | ||||||||
| Common stock, $par value; shares authorized; and shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | ||||||||
| Treasury stock, at cost; and shares at December 31, 2023 and December 31, 2022, respectively | ( | ) | ( | ) | ||||
| Stock loan receivable | ( | ) | ( | ) | ||||
| Shares to be cancelled | ( | ) | ||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Non-Controlling Interest | ( | ) | ( | ) | ||||
| Total stockholders’ deficit attributable to GBT Technologies, Inc. | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F-4
GBT TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
| Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Sales | $ | |||||||
| Consulting Income – Related Party | ||||||||
| Total sales | ||||||||
| Cost of Goods Sold | ||||||||
| Gross Profit | ||||||||
| Operating expenses: | ||||||||
| General and administrative | ||||||||
| Marketing | ||||||||
| Professional | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( |
) | ( |
) | ||||
| Other income (expense): | ||||||||
| Amortization of debt discount | ( |
) | ( |
) | ||||
| Change in fair value of derivative liability | ( |
) | ||||||
| Interest expense and financing costs | ( |
) | ( |
) | ||||
| Gain on debt extinguishment | ||||||||
| Gain on RJW settlement | ||||||||
| Change in fair value of marketable securities | ( |
) | ( |
) | ||||
| Gain on loss of control | ||||||||
| Other income | ||||||||
| Total other income (expense) | ( |
) | ||||||
| Profit (Loss) before income taxes | ( |
) | ||||||
| Income tax expense | ||||||||
| Profit (Loss) from continuing operations | ( |
) | ||||||
| Discontinued operations | ||||||||
| Gain/(Loss) from discontinued operations | ( |
) | ( |
) | ||||
| Net Income (Loss) | $ | ( |
) | $ | ||||
| Less: net loss attributable to the noncontrolling interest | ( |
) | ( |
) | ||||
| Net loss attributable to GTB Technologies Inc. | $ | ( |
) | $ | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Net Income (Loss) per share (basic and diluted): | ||||||||
| Basic | $ | ( |
) | $ | ||||
| Diluted | ( |
) | ||||||
The accompanying footnotes are an integral part of the consolidated financial statements.
F-5
GBT TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
| Series B Convertible | Series C Convertible | Series H Convertible | Series I Convertible | Stock | Additional | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Treasury Stock | Share to be Cancelled | Loan | Paid-in | Accumulated | Noncontrolling | Stockholders' | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Receivable | Capital | Deficit | Interest | Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversions | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for JV - Tokenize | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of shares | — | — | — | — | ( | ) | ( | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Method Investment - Meta | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversions | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued to Tokenize | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for service | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of shares to be issues | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F-6
| GBT TECHNOLOGIES INC. |
CONSOLIDATED STATEMENT OF CASH FLOWS |
| Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of debt discount | ||||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Excess of debt discount and financing costs | ||||||||
| Shares issued for services | ||||||||
| Change in fair value of market equity security | ||||||||
| Gain on debt extinguishment | ( | ) | ||||||
| Gain on debt settlement | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Account receivable | ||||||||
| Other receivable | ||||||||
| Prepaid Expense | ( | ) | ||||||
| Inventory | ||||||||
| Inventory in transit | ||||||||
| Unearned revenue | ( | ) | ( | ) | ||||
| Contract liabilities | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Investment to GTX | ( | ) | ||||||
| Investment to TGHI | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Issuance of convertible notes | ||||||||
| Issuance of note receivable | ( | ) | ||||||
| Proceeds from sales of common stock | ||||||||
| Repayments to related party | ( | ) | ( | ) | ||||
| Repayment of Convertible note | ( | ) | ( | ) | ||||
| Proceeds from related party | ||||||||
| Repayment of note payable | ( | ) | ||||||
| Issuance of notes payable | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Supplemental non-cash investing and financing activities | ||||||||
| Debt discount related to convertible debt | $ | $ | ||||||
| Reduction in derivative liability due to conversion | $ | $ | ||||||
| Shares issued for conversion of convertible debt | $ | $ | ||||||
| Share issuance for JV Metaverse | $ | $ | ||||||
| Share issuance for JV Tokenize | $ | $ | ||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F-7
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Note 1 - Organization and Basis of Presentation
Organization and Line of Business
GBT Technologies Inc. (the “Company”, “GBT”, or “GTCH”) was incorporated on July 22, 2009 under the laws of the State of Nevada. The Company is targeting growing markets such as development of Internet of Things (IoT) and Artificial Intelligence (AI) enabled networking and tracking technologies, including wireless mesh network technology platform and fixed solutions, development of an intelligent human body vitals device, asset-tracking IoT, and wireless mesh networks. Effective August 5, 2019, the Company changed its name from Gopher Protocol Inc. to GBT Technologies Inc. The Company derived revenues from (i) the provision of IT consulting services; and (ii) from the licensing of its technology. (ii) from selling electronic products through e-commerce platforms.
On February 18, 2022 the Company, effective March 1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company shares revenues generated by Mahaser with respect to e-commerce sales through the online retail platform in the United States of America. Effective July 1, 2023, the Company agreed to terminate the RSA with Mahaser Ltd.
On July 20, 2023, the Company through its wholly owned subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize Corp (“GBT Tokenize”). GBT Tokenize has developed a vital device based on the Technology Portfolio that is ready for commercialization, as well as certain derivative technologies, which positioned GBT Tokenize to further develop or license certain code sources. On April 3, 2023, GBT Tokenize entered its first commercial transaction to date through the sale of the Avant-AI! technology that been developed by GBT Tokenize, based on the Technology Portfolio. As of September 30, 2023, the Company did not record the commercial transactions as it was contingent per the Lock-Up term.
The audited condensed CFS are prepared by the Company, pursuant to the rules and regulations of the SEC. The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented.
Basis of Presentation
The accompanying CFS were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Stock Split
On October 26, 2021, the Company
effectuated a
In July 2, 2022 the Company filed a preliminary information statement to the stockholders of record (the “Record Date”) in connection with certain actions to be taken by the written consent by stockholders holding a majority of the voting stock of the Company, dated as of June 28, 2022.
F-8
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
| ● | To amend the Company’s Articles of Incorporation, (the “Articles
of Incorporation”) to increase the number of authorized shares of common stock, par value $ per share (the “Common
Stock”), of the Company from 2,000,000,000 shares to |
| (i) authorize the Company’s Board of Directors to effect, in
its sole discretion, a reverse stock split of the Common Stock in a ratio of up to |
On October 12, 2023, the Company amended its articles of incorporation to increase its authorized shares of common stock to (the “Increase Amendment”). The Increase Amendment was approved by the board of directors as well as the shareholders holding in excess of a majority of the issued and outstanding voting shares of the Company.
Note 2 – Going Concern
The accompanying CFS have been prepared assuming
the Company will continue as a going concern. The Company has an accumulated deficit of $
The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through some private placement offerings of debt and equity securities. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These CFS do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Note 3 – Discontinued Operations
On February 18, 2022, the Company, effective March
1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the
Company shares in revenues generated by Mahaser e-commerce sales through the online retail platform in the United States of America.
Mahaser owns an e-commerce platform as a store which is the legal, exclusive owner of Ravenholm Electronics. The Company will operate
the e-commerce platform and entitled to 95% for all revenue generated by and received by Mahaser from March 1, 2022 through December
31, 2022. The RSA provides that the Company will be entitled to appoint a manager to Mahaser. As consideration, the Company will pay
Mahaser $
The following table presents the aggregate carrying amounts of assets and liabilities of discontinued operations of Mahaser Ltd. in the consolidated balance sheet as of December 31, 2022:
| Carrying amounts of assets included as part of discontinued operations: | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable, net | ||||
| Inventory | ||||
| Total assets classified as discontinued operations in the consolidated balance sheet | $ | |||
| Carrying amounts of liabilities included as part of discontinued operations: | ||||
| Accounts payable and accrued expenses | $ | |||
| Notes payable, noncurrent | ||||
| Total liabilities classified as discontinued operations in the consolidated balance sheet | $ |
F-9
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
The financial results of Mahaser Ltd. are present as loss from discontinued operations, net of income taxes on our consolidated income through December 31, 2023 and 2022, when our deconsolidation occurred. The following table presents the financial results of Mahaser:
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expense | ||||||||
| Professional expenses | ||||||||
| General and administrative expenses | ||||||||
| Total operating expense | ||||||||
| Loss from operations of discontinued operations | ( | ) | ( | ) | ||||
| Other expense | ||||||||
| Other income | ||||||||
| Nonoperating expense - interest expense and financing | ||||||||
| Total other expense | ||||||||
| Loss from discontinued operations before provision for income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Loss from discontinued operations, net of income taxes | $ | ( | ) | $ | ( | ) | ||
Note 4 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of CFS in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the CFS and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying CFS include valuation of derivatives and valuation allowance on deferred tax assets.
Principles of Consolidation
The accompanying CFS include the accounts of the Company and its subsidiaries; the Company’s 50% owned subsidiaries: GBT Tokenize Corp; and GBT BitSpeed Corp. (currently inactive) and , Gopher Protocol Costa Rica Sociedad De Responsabilidad Limitada (currently inactive), a wholly owned subsidiary, AltCorp Trading LLC, a Costa Rica company (“AltCorp” currently inactive) and Greenwich International Holdings, a Costa Rica corporation (“Greenwich” currently inactive). All significant intercompany transactions and balances were eliminated.
F-10
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
For entities determined to be VIEs, an evaluation is required to determine whether the Company is the primary beneficiary. The Company evaluates its economic interests in the entity specifically determining if the Company has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance (“the power”) and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (“the benefits”). When making the determination whether the benefits received from an entity are significant, the Company considers the total economics of the entity, and analyzes whether the Company’s share of the economics is significant. The Company utilizes qualitative factors, and, where applicable, quantitative factors, while performing the analysis. In addition, the Company’s variable interests in Mahaser obligate the Company to absorb deficits and provide it with the right to receive benefits that could potentially be significant to Mahaser. As a result of this analysis, the Company concluded it is the primary beneficiary of Mahaser and therefore consolidates the balance sheets, results of operations and cash flows of Mahaser. The Company performs a qualitative assessment of Mahaser on an ongoing basis to determine if it continues to be the primary beneficiary.
Effective July 1, 2023 the Company terminated its joint venture revenue sharing (“Termination Agreement”) with Mahaser LTD (“Mahaser”). Until June 30, 2023, the Company’s variable interests in Mahaser obligate the Company to absorb deficits and provide it with the right to receive benefits that could potentially be significant to Mahaser. As a result of this analysis, the Company concluded it is the primary beneficiary of Mahaser and therefore consolidates the balance sheets, results of operations and cash flows of Mahaser until June 30, 2023. The Company performs a qualitative assessment of Mahaser on an ongoing basis to determine if it continues to be the primary beneficiary. Per the Termination Agreement, the Company has no access to Mahaser and ceased consolidated Mahaser as it does not comply with the condition in the qualitative assess, and as such this CFS does not include Mahaser operations for the period ended December 31, 2023.
Cash Equivalents
For the purpose of the statement of cash flows, cash
equivalents include time deposits, certificate of deposits, and all highly-liquid debt instruments with original maturities of three
months or less. As of December 31, 2023 and 2022, the Company did
Funds in Escrow
Restricted cash is $
Marketable Securities
The Company accounts for investment securities in accordance with ASC Topic 321, Investments – equity securities. Marketable equity securities are reported at FV based on quotations available on securities exchanges with any unrealized gain or loss being reported as a component of other income (expense) on the statement of operations. The portion of marketable equity security expected to be sold within 12 months of the balance sheet date is reported as a current asset. These publicly traded equity securities are valued using quoted prices and are included in Level 1.
F-11
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Inventory (2022 and interim 2023)
Inventory consists of electronic product ready for sale online on e-commerce platforms. It is stated at the lower of cost or net realizable value and all inventories were returned product from online customers. We value our inventory using the weighted average costing method. Our Company’s policy is to include as a part of inventory any freight incurred to ship the product from our contract vendors to our warehouses. Outbound freight costs to our customers are considered period costs and reflected in selling, general and administrative expenses. We regularly review inventory and consider forecasts of future demand, market conditions and product obsolescence.
Note Receivable Paid-Off (2022)
On September 18, 2020, the Company entered into a
Purchase and Sale Agreement with Mr. LightHouse LTD., an Israeli corporation (“MLH”) pursuant to which the Company
agreed to sell and assign to MLH, effective July 1, 2020 all the shares, and certain specified liabilities, of Ugopherservices Corp.
(“UGO”), a wholly owned subsidiary of the Company for $
Derivative Financial Instruments
The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its FV and is then re-valued at each reporting date, with changes in the FV reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of December 31, 2022 and 2021, the Company’s only derivative financial instrument was an embedded conversion feature associated with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage of the Company’s stock price at the date of conversion.
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their FV due to their short maturities.
FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the FV of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines FV, and establishes a three-level valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. | |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
| ● | Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the FV measurement. |
F-12
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.
For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as a financial instrument, and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
The Company uses Level 2 inputs for its valuation methodology for derivative liabilities as their FV were determined by using the Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect FV at each period end, with any increase or decrease in the FV being recorded in results of operations as adjustments to FV of derivatives.
At December 31, 2023 and 2022, the Company identified the following liabilities that are required to be presented on the balance sheet at FV:
| Fair Value | Fair Value Measurements at | |||||||||||||||
| As of | December 31, 2022 | |||||||||||||||
| Description | December 31, 2022 | Using Fair Value Hierarchy | ||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||
| Conversion feature on convertible notes | $ | $ | $ | $ | ||||||||||||
| Fair Value | Fair Value Measurements at | |||||||||||||||
| As of | December 31, 2023 | |||||||||||||||
| Description | December 31, 2023 | Using Fair Value Hierarchy | ||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||
| Conversion feature on convertible notes | $ | $ | $ | $ | ||||||||||||
Treasury Stock
Treasury stock is recorded at cost. The re-issuance of treasury shares is accounted for on a first in, first-out basis and any difference between the cost of treasury shares and the re-issuance proceeds are charged or credited to additional paid-in capital. The Company has 8 shares as treasury shares from acquisitions that were commenced in 2011.
Reclassification
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
Effective July 1, 2023 the Company terminated its joint venture revenue sharing (“Termination Agreement”) with Mahaser LTD (“Mahaser”). Until June 30, 2023, the Company’s variable interests in Mahaser obligate the Company to absorb deficits and provide it with the right to receive benefits that could potentially be significant to Mahaser. The Company evaluated for the period ended on June 30, 2023, whether it has a variable interest in Mahaser, whether Mahaser is a VIE and whether the Company has a controlling financial interest in Mahaser. The Company concluded that it has variable interests in Mahaser on the basis of GBT has 100% control over the JV/revenue sharing, and as such should consolidate the JV into its books and records as it assigned 100% financial responsibility. Mahaser’s equity at risk, as defined by GAAP, is considered to be insufficient to finance its activities without additional support, and, therefore, Mahaser is considered a VIE. As termination Agreement took place during the reporting period, the financial been classified to disclose this operation as discontinued operation.
F-13
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Revenue Recognition
Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on January 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. The Company had no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying CFS for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.
Revenue from providing IT consulting services are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements:
| ● | executed contracts with the Company’s customers that it believes are legally enforceable; | |
| ● | identification of performance obligations in the respective contract; | |
| ● | determination of the transaction price for each performance obligation in the respective contract; | |
| ● | allocation the transaction price to each performance obligation; and | |
| ● | recognition of revenue only when the Company satisfies each performance obligation. |
These five elements, as applied to each of the Company’s IT revenue category, is summarized below:
| ● | IT consulting services - revenue is recorded on a monthly basis as services are provided. |
These five elements, as applied to each of the Company’s license revenue category, is summarize below:
| ● | License services – the one-time related party licensing income recorded as other income upon agreement is executed and services are provided and recognized over the term of five years. |
E-Commerce sales – (discontinued during 2023)
| ● | Identify the contract(s) with a customer. ASC 606 defines a contract as “an agreement between two or more parties that creates enforceable rights and obligations”. Since this is an e-commerce sale on the Amazon of eBay websites, the Company just followed the general terms on Amazon or eBay websites and the customer entered into a contract with the Company based on the product listed on the Amazon or eBay websites; |
Identify the performance obligations in the contract. According to the contract, the Company is responsible for operation exclusively. The Company is entitled to all revenue which is being paid by Amazon or eBay into a designated bank account and the Company is responsible for all product acquisitions as well as shipments. The only performance obligations were the electronic products that were listed on Amazon or eBay websites and the Company determined each order is one single obligation;
Determine the transaction price. The transaction price set to be the listed price on the Amazon or eBay websites.;
Allocation the transaction price to the performance obligations in the contract.; and
Recognize revenue when the Company satisfies a performance obligation. Sales are being recognized upon shipment.
F-14
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Unearned revenue
Unearned revenue represents the net amount received
for the purchase of products that have not seen shipped to the Company’s customers. The Company has $
Contract liabilities
On February 22, 2022, the Company entered into an
Intellectual Property License and Royalty Agreement with Touchpoint Group Holdings, Inc. (“Touchpoint” or “TGHI”)
pursuant to which the Company granted TGHI a worldwide license for its technologies for five years in the domains of Internet of Things
(IoT) and Artificial Intelligence enabled mobile technologies pertaining to the Company’s digital currency technology (the “Technology”).
GBT will charge TGHI royalties based on actual uses by TGHI of the Technology resulting from revenue attributable to the use, performance
or other exploitation of the Technology, to the extent applicable, after deducting any taxes that the Company may be required to collect,
and deducting any international sales, goods and services, value added taxes or similar taxes which the Company is required to pay, if
any, excluding deductions for taxes on the Company net income. TGHI agreed to issue the Company shares of common
stock of TGHI in the FV of $
On or about May 10, 2023 TGHI filed with the SEC Form 15 choosing to become a non-reporting entity. As such the Company void its entire contract liability with TGHI.
Variable Interest Entity
On February 18, 2022, the Company, effective March
1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the
Company shares in revenues generated by Mahaser e-commerce sales through the online retail platform in the United States of America.
Mahaser owns an e-commerce platform as a store which is the legal, exclusive owner of Ravenholm Electronics. The Company will operate
the e-commerce platform and entitled to 95% for all revenue generated by and received by Mahaser from March 1, 2022 through December
31, 2022. The RSA provides that the Company will be entitled to appoint a manager to Mahaser. As consideration, the Company will pay
Mahaser $
On March 31, 2022, the parties entered into Amendment No. 2 to the RSA, where Mahaser agreed to pay the Company 100% per year for all revenue generated by and received by seller from the sales by Amazon within the United States of America as follows from March 1, 2022 through December 31, 2022. The Company will be responsible for 100% of the cost of goods sold as well. In addition, the Company is entitled to earn 100% revenues and cost of goods sold of the period from February 1, 2022 to February 28, 2022. On January 1, 2023 the company extended their partnership to December 31, 2023. Effective July 1, 2023, the Company agreed to terminate the RSA with Mahaser Ltd. The years ended on December 31, 2023 and December 31, 2022 does not include the result of operation by Mahaser, as it ceases being VIE.
F-15
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented and its current on all its tax filings federal and state until 2022 inclusive.
F-16
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Due to the net income incurred potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented. The following potentially-dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Series B preferred stock | ||||||||
| Series C preferred stock | ||||||||
| Series H preferred stock | ||||||||
| Series I preferred stock | ||||||||
| Warrants | ||||||||
| Convertible notes | ||||||||
| Total | ||||||||
Management’s Evaluation of Subsequent Events
The Company evaluates events that have occurred after the balance sheet date of December 31, 2022, through the date which the CFS are issued. Based upon the review, other than described in Note 20 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the CFS.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company adopted this ASU on the CFS in the year ended December 31, 2021. The adoption had no material impact on the CFS for the years ended December 31, 2023 and December 31, 2022 .
On April 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”) to clarify the accounting by issuers for modifications or exchanges of equity-classified warrants. The new ASU is available here and effective for all entities in fiscal years starting after December 15, 2021. Early adoption is permitted. The Company adopted this ASU on the CFS in the year ended December 31, 2021. The adoption had no material impact on the CFS for the years ended December 31, 2023 and December 31, 2022.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying CFS. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
F-17
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Note 5 – Marketable Securities
TGHI Agreement
On January 28, 2022, the Company entered
into a Stock Purchase Agreement with Marko Radisic (the “Seller”) and Touchpoint Group Holdings, Inc. (“TGHI”)
pursuant to which the Company acquired shares of Series A Convertible Preferred Stock (the “Touchpoint Preferred”)
from the Seller for $
TGHI converted the Touchpoint Preferred into shares
of common stock of Touchpoint on February 23, 2022 resulting in the Company owning shares of common stock of Touchpoint
in total FV of $
On or about May 10, 2023 TGHI filed with the SEC Form 15 choosing to become a non-reporting entity. As such the Company depreciate its entire investment with TGHI.
MetAlert -prior name GTX Corp
On April 12, 2022, GBT Tokenize Corp (“GBT
Tokenize”), a Nevada corporation which the Company owns 50% of the outstanding shares of common stock, entered into a series of
agreements with GTX Corp (“GTX”) and various note holders of GTX pursuant to which Tokenize acquired a convertible promissory
note of GTX of $
The GTX Notes bear 10% interest and 50% of the
principal may be converted into shares of common stock on a one-time basis at a conversion price of $
GTX changed its name into Metalert Inc. on or about September 20, 2022.
On September 30, 2022, GBT Tokenize, loaned
MetAlert Inc., a Nevada corporation (f/k/a GTX Corp.) (“MetAlert”) $
MetAlert designs, manufactures and sells various interrelated and complementary products and services in the wearable technology and IoMT (Internet of Medical Things) marketplace.
On or about January 31, 2023 GTB Tokenize Corp the
Company’s
F-18
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
As of December 31, 2022,
the notes had an outstanding balance of $
As of December 31, 2023 and December 31, 2022, the
marketable security had a FV of $
Note 6 – Investment Avant.
On April 3, 2023, GBT Tokenize Corp., a subsidiary
that is owned
In consideration of acquiring the System, TREN is required to issue to the Seller common shares of TREN (the “Shares”). The Shares will be restricted per Rule 144 as promulgated under the Securities Act of 1933, as amended (the “1933 Act”) and Seller agreed to a lock-up period of nine (9) months following closing (the “Lock Up Term”). In the event that TREN is unable to up-list to Nasdaq either through a business combination or otherwise prior to the expiration of the Lock Up Term, the Seller may request within three (3) business days of the expiration of the Lock-Up Term, that all transactions contemplated by the APA be unwound.
In addition, TREN, Seller and GBT entered into a license agreement regarding the System, granting the Seller and/or GBT a perpetual, irrevocable, non-exclusive, non-transferable license for using the System to be used in its own development, as in-house tool, where Seller or GBT may not sublicense its rights hereunder to any customer or client.
On July 18, 2023 TREN changed its name into: Avant Technologies, Inc and its ticker symbol on OTC Markets was changed into AVAI.
Note 7 - Stock Loan Receivable
On January 8, 2019, the Company entered into a Stock Pledge Agreement with Latin American Exchange Latinex Casa de Cambio, S.A., a Costa Rica corporation (“Latinex”), to provide that Latinex may maintain its required regulatory capital as required by various regulators. The Company has pledged 4,006 restricted shares of its common stock valued at $7,610,147 (based on the closing price on the grant date) for a term of three years for an annual payment of $375,000 paid in quarterly installments of $93,750. In lieu of cash payment, Latinex may pay the Company in virtual currency of WISE Network S.A. valued at a 50% discount of its offering price of $10 per token. In the event that Latinex’s required capital has decreased below $5,000,000, Latinex is permitted to sell the pledged shares of common stock only in an amount to ensure that Latinex can satisfy the required capital levels. The Company must consent to such sale of the shares of common stock, which may not be unreasonably withheld. Upon expiration of the agreement, the remaining shares of common stock shall be returned to the Company free and clear of all liens. The Company has recorded the value of these shares of common stock as a stock loan receivable which is presented as a contra-equity account in the accompanying consolidated balance sheets. At December 31, 2019, the Company wrote off the accrued interest income as Latinex did not perform any payment and the Company has no mean to enforce this payment. Latinex agreed in principle to return the pledged 4,006 restricted shares of its common stock to the Company for cancellation. The 4,006 restricted shares of common stock have not yet been returned to the Company as of December 31, 2023.
Note 8 – Impaired Investment
Investment in GBT Technologies, S.A.
F-19
GBT
TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
On June 17, 2019, the Company,
AltCorp Trading LLC, a Costa Rica company and a wholly-owned subsidiary of the Company (“AltCorp”), GBT Technologies, S.A.,
a Costa Rica company (“GBT-CR”) and Pablo Gonzalez, a shareholder’s representative of GBT-CR (“Gonzalez”),
entered into and closed an Exchange Agreement (the “GBT Exchange Agreement”) pursuant to which the parties exchanged certain
securities. In accordance with the Exchange Agreement, AltCorp acquired shares of GBT-CR representing 25% of its issued
and outstanding shares of common stock from Gonzalez for the issuance of shares of Series H Convertible Preferred Stock
of the Company and a Convertible Note in the principal amount of $
The Gopher Convertible Note bears interest of 6% and is payable at maturity on December 31, 2021. At the election of Gonzalez, the Gopher Convertible Note can be converted into a maximum of 20,000 shares of Series H Preferred Stock. Each share of Series H Preferred Stock is convertible, at the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($500 per share). The Series H Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series H Preferred Stock shall be entitled to one vote for each share of common stock that the Series H Preferred Stock may be convertible into. Upon conversion of the Gopher Convertible Note and the 20,000 shares of Series H Preferred Stock, Gonzalez would be entitled to less than 50% of the resulting outstanding shares of common stock of the Company following conversion in full and, as a result, such transaction is not considered a change of control.
On May 19, 2021, the Company, entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of Note Balance Principal and Accrued Interest (the “Gonzalez Agreement”) with third party, GBT-CR, IGOR 1 Corp and Gonzalez. Pursuant to the Gonzalez Agreement, without any party admission of liability and to avoid litigation, the parties had agreed to (i) extend the GBT Convertible Note maturity date to December 31,2022, (ii) amend the GBT Convertible Note terms to include a beneficial ownership blocker of 4.99% and a modified conversion feature to the GBT Convertible Note with 15% discount to the market price during the 20 trading day period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT Convertible Note by Gonzalez to a third party.
GBT-CR is in the business of the strategic management of BPO (Business Process Outsourcing) digital communications processing for enterprises and startups, distributed ledger technology development, AI development and fintech software development and applications.
The Company accounted for its investment in GBT-CR using the equity method of accounting; however, in 2020, the Company owned less than 20% after GBT-CR issued additional shares to other investors therefore exercised no control over GBT-CR; therefore, this investment is currently accounted for under the cost method. Moreover, on March 19, 2020, California Governor Gavin Newsom issued a stay-at-home order to protect the health and well-being of all Californians and to establish consistency across the state in order to slow the spread of COVID-19. California was therefore under strict quarantine control and travel has been severely restricted, resulting in disruptions to work, communications, and access to files (due to limited access to facilities). The stay-at-home order was lifted in California only on January 25, 2021. As such, the Company was unable to access or to contact GBT-CR on an on-going basis, and cannot get information about GBT-CR.
F-20
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Investment in Joint Venture GBT Tokenize Corp
On March 6, 2020, the Company through Greenwich, entered into a Joint Venture and Territorial License Agreement (the “Tokenize Agreement”) with Tokenize-It, S.A. (“Tokenize”), which is owned by a Costa Rica Trust represented by Pablo Gonzalez (“Gonzalez”). Gonzalez also represents Gonzalez Costa Rica Trust, which holds a note in the principal amount of $10,000,000 and is also a shareholder of the Company. Under the Tokenize Agreement, the parties formed GBT Tokenize Corp., a Nevada corporation (“GBT Tokenize”). The purpose of GBT Tokenize is to develop, maintain and support source codes for its proprietary technologies including advanced mobile chip technologies, tracking, radio technologies, AI core engine, electronic design automation, mesh, games, data storage, networking, IT services, business process outsourcing development services, customer service, technical support and quality assurance for business, customizable and dedicated inbound and outbound calls solutions, as well as digital communications processing for enterprises and startups (“Technology Portfolio”), throughout the State of California. Upon generating any revenue from the Technology Portfolio, the Joint Venture will earn the first right of refusal for other territories. The Company pledged its 50% ownership in GBT Tokenize and its 100% ownership of Greenwich to Tokenize to secure its Technology Portfolio investment. The Company shall appoint two directors and Tokenize shall appoint one director of GBT Tokenize. Tokenize shall contribute the services and resources for the development of the Technology Portfolio to GBT Tokenize. The Company shall contribute shares of common stock of the Company (“GBT Shares”) to GBT Tokenize. Tokenize and the Company will each own 50% of GBT Tokenize. The shares were valued at $.
In addition, GBT Tokenize and Gonzalez entered into
a Consulting Agreement in which Gonzalez is engaged to provide services for $
Through this Joint Venture the parties commenced
development of an intelligent human vital signs’ device, which we currently refer to as the qTerm. The platform is an expansion
of the existing license agreement with GBT Tokenize Corp., which provided GBT Tokenize Corp. with an exclusive territory of California
to develop certain of the Company’s technology. As the nature of the platform cannot be restricted only to California, the Company’s
joint venture GBT Tokenize Corp. will be compensated with additional two hundred million shares of the Company to strengthen its funding,
subject to board approval. A provisional patent application for the qTerm Medical Device was filed on March 30, 2020 with the USPTO. The
application has been assigned serial number 63001564. The Joint Venture completed successfully the first prototype. There is no guarantee
that the Company will be successful in researching, developing or implementing this product into the market. In order to successfully
implement this concept, the Company will need to raise adequate capital to support its research and, if successfully researched, developed
and granted regulatory approval, the Company would need to enter into a strategic relationship with a third party that has experience
in manufacturing, selling and distributing this product. There is no guarantee that the Company will be successful in any or all of these
critical steps. On May 28, 2021, the parties agreed to amend the Tokenize Agreement to expand territory granted for the Technology Portfolio
under the license to GBT Tokenize to include the entire continental United States. The Company has further agreed to issue GBT Tokenize
an additional shares of common stock of the Company. The shares were valued at $
On July 20, 2023, the Company through its wholly owned inactive subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize Corp (“GBT Tokenize”).
F-21
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
The 2023 Tokenize Agreement restated and replaced
the 2022 Tokenize Agreement. Pursuant to the 2023 Tokenize Agreement, as a result of the contribution of the Technology Portfolio by
Tokenize and the subsequent contribution of services for the development of the Technology Portfolio by Tokenize and Magic, GBT Tokenize
has been able to continue in operation, which has benefited the Company despite its contribution of million shares of common stock
valued at approximately $
The Company pledged its 50% ownership in GBT Tokenize
and its
Although the investment was impaired, the product
development is still ongoing. The carrying amount of this investment at December 31, 2023 and December 31, 2022, was $
Note 9 – Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at December 31, 2023 and 2022 consist of the following:
| 2023 | 2022 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Accrued interest | ||||||||
| Total | $ | $ | ||||||
Note 10 – Unearned Revenue
Unearned revenue represents the net amount received
for the purchase of products that have not seen shipped to the Company’s customers. In 2018, the Company ran pre-sales efforts
for its pet tracker product and received prepayments for its product. The Company has $
Note 11 – Convertible Notes Payable, Non-related Partied and Related Party
Convertible notes payable – non related parties at December 31, 2023 and 2022 consist of the following:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Convertible note payable to GBT Technologies S.A | $ | $ | ||||||
| Convertible notes payable to 1800 | ||||||||
| Convertible notes payable to Glen | ||||||||
| Total convertible notes payable, non related parties | ||||||||
| Unamortized debt discount | ( | ) | ( | ) | ||||
| Convertible notes payable – non related parties | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Convertible notes payable – non related parties, long-term portion | $ | $ | ||||||
F-22
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
$10,000,000 for GBT Technologies S. A. acquisition
In accordance with the acquisition
of GBT-CR the Company issued a convertible note in the principal amount of $
On May 19, 2021, the Company,
Gonzalez, GBT-CR and IGOR 1 Corp entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of outstanding balance
plus accrued interest (the “Gonzalez Agreement”). Pursuant to the Gonzalez Agreement, without any party admission of liability
and to avoid litigation, the parties had agreed to (i) extend the GBT convertible note maturity date to
During the period ended
December 31, 2023,
As of December 31, 2023,
the note had an outstanding balance of $
Paid Off Notes/Converted Notes
Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC -
On May 5, 2022, the Company entered into a Securities
Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor (“DL”), pursuant to which the Company issued to
DL a Convertible Promissory Note (the “DL Note”) of $
The outstanding principal amount of the DL Note may
not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day,
DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to
F-23
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Unless the Company shall have first delivered to DL, at least 48 hours prior to the closing of any equity (or debt with an equity component) financing in an amount less than $150,000 (“Future Offering”), written notice describing the proposed Future Offering and providing the Buyer an option during the 48 hour period following delivery of such notice to DL the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering then the Company is restricted from conducting the Future Offering during the period beginning on the Issue Date and ending nine months following the Issue Date.
During the period ended March 31, 2023, the entire
balance of convertible note of $
Convertible Note - On September 13, 2022, the Company
entered into a Securities Purchase Agreement (dated September 9, 2022) with 1800 Diagonal Lending LLC, an accredited investor (“DL”)
pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) of $
During the period ended December 31, 2023, the
company paid back $
As of December 31, 2023,
the note had an outstanding balance of $
Outstanding Notes
Glen Eagle
The Company entered into a series of loan arrangements
with Glen Eagles Acquisition LP pursuant to which it received $
In order to include a convertible feature for the
$
F-24
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
As of December 31, 2023,
the consolidated convertible note had an outstanding balance of $
Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC
Straight Note – with
Convertible Feature - On March 1, 2023, the Company entered into a Securities Purchase Agreement, with 1800 Diagonal Lending LLC, an
accredited investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) of $
The outstanding principal
amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on
the DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to
As of December 31, 2023, the note had an outstanding balance of $
Convertible Note - On March
1, 2023, the Company entered into a Securities Purchase Agreement with DL pursuant to which the Company issued to DL a Convertible Promissory
Note (the “DL Convertible Note”) of $
The outstanding principal
amount of the DL Convertible Note may not be converted prior to the period beginning on the date that is 180 days following the date
the DL Convertible Note is issued. Following the 180th day, DL may convert the DL Convertible Note into shares of the Company’s
common stock at a conversion price equal to
During the period ended
December 31, 2023, 1800 Diagonal converted $
As of December 31, 2023,
the note had an outstanding balance of $
F-25
GBT
TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Straight Note $47,208 - On April 24, 2023,
the Company entered into a Securities Purchase Agreement, with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant
to which the Company issued to DL a Promissory Note (the “DL Note”) in the aggregate principal amount of $
The outstanding principal amount of the DL Note may
not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert
the DL Note into shares of the Company’s common stock at a conversion price equal to
As of December 31, 2023,
the note had an outstanding balance of $
Convertible Note $50,580 - On April 24, 2023,
the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant
to which the Company issued to DL a Convertible Promissory Note (the “DL Note”) in the aggregate principal amount of $
The outstanding principal amount of the DL Note may
not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day,
DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to
As of December 31, 2023,
the note had an outstanding balance of $
Convertible notes payable – prior related parties at December 31, 2023 and December 31, 2022 consist of the following:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Convertible note payable to Stanley Hills | ||||||||
| Unamortized debt discount | ||||||||
| Convertible notes payable, net, related party | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Convertible notes payable, net, related party, long-term portion | $ | $ | ||||||
F-26
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Stanley Hills LLC
The Company entered into
a series of loan agreements with Stanley Hills LLC (“Stanley”) pursuant to which it received more than $
As of December 31, 2023
and December 31, 2022 the principal balance of Stanley debt is $
Discounts on convertible notes
The Company recognized debt discount of $
A roll-forward of the convertible notes payable from December 31, 2022 to December 31, 2023 is below:
| Convertible notes payable, December 31, 2022 | $ | |||
| Issued for cash | ||||
| Debt discount related to new convertible notes | ( | ) | ||
| Payment with cash | ( | ) | ||
| Conversion to common stock | ( | ) | ||
| Amortization of debt discounts | ||||
| Convertible notes payable, December 31, 2023 | $ |
Note –12 - Notes Payable, Non-related Parties and Related Party
Notes payable, non-related parties at December 31, 2023 and December 31, 2022 consist of the following:
F-27
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| 1800 note | $ | $ | ||||||
| SBA loan | ||||||||
| Total notes payable | ||||||||
| Unamortized debt discount | ( | ) | ||||||
| Notes payable | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Notes payable, long-term portion | $ | $ | ||||||
SBA Loan
On June 22, 2020, the Company received a loan from
the Small Business Administration under the Economic Injury Disaster Loan program related to the COVID-19 relief efforts. The loan bears
interest at
Discounts on Promissory Note
The
Company recognized debt discount of $
Notes payable, related party at December 31, 2023 and December 31, 2022 consist of the following:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Alpha Eda note payable | $ | $ | ||||||
| Total notes payable, related party | ||||||||
| Unamortized debt discount | ||||||||
| Notes payable, net, related party | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Notes payable, net, related party, long-term portion | $ | $ | ||||||
Alpha Eda
On November 15, 2020, the Company issued a promissory
note to Alpha Eda, LLC (“Alpha”), a related party for $140,000. The note accrues interest at 10%, is unsecured and was
due on September 30, 2021. On March 31, 2023 Alpha and the Company extended the note maturity to December 31, 2023. The balance
of the note at December 31, 2023 and at December 31, 2022 was $
F-28
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Note 13 – Accrued Settlement
In connection with a legal matter filed by the Investor
of the $
Note 14 - Derivative Liability
Certain of the convertible notes payable discussed in Note 10 have a conversion price that can be adjusted based on the Company’s stock price which results in the conversion feature being recorded as a derivative liability.
The FV of the derivative liability is recorded and shown separately under current liabilities. Changes in the FV of the derivative liability is recorded in the statement of operations under other income (expense).
The Company uses a weighted average Black-Scholes option pricing model with the following assumptions to measure the FV of derivative liability at December 31, 2023 and 2022:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Stock price | $ | $ | ||||||
| Risk free rate | – | % | – | % | ||||
| Volatility | – | % | – | % | ||||
| Conversion/ Exercise price | $ | $ | ||||||
| Dividend rate | % | % | ||||||
The following table represents the Company’s derivative liability activity for the period ended December 31, 2023:
| Derivative liability balance, December 31, 2022 | $ | |||
| Issuance of derivative liability during the period | ||||
| Fair value of beneficial conversion feature of debt converted | ( | ) | ||
| Change in derivative liability during the period | ||||
| Derivative liability balance, December 31, 2023 | $ |
The significant increase in the fair value of derivative liability was mainly due to the Company’s stock price dropping from $ at December 31, 2022 to $ at December 31, 2023. It reduced the strike price of the convertible notes and increased the total liabilities of the total convertible shares into common stock as of December 31, 2023.
Note 15 - Stockholders’ Equity
Common Stock
In July 7, 2022 the Company filed a preliminary information statement to the stockholders of record (the “Record Date”) in connection with certain actions to be taken by the written consent by stockholders holding a majority of the voting stock of the Company, dated as of June 28, 2022.
F-29
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
| ● | To amend the Company’s Articles of Incorporation, (the “Articles of Incorporation”) to increase the number of authorized shares of common stock, par value $ per share (the “Common Stock”), of the Company from shares to 10,000,000,000 shares. This action concluded on August 11, 2022. |
| ● | (i) authorize the Company’s Board of Directors to effect, in
its sole discretion, a reverse stock split of the Common Stock in a ratio of up to |
On October 12, 2023, the Company amended its articles of incorporation to increase its authorized shares of common stock to (the “Increase Amendment”). The Increase Amendment was approved by the board of directors as well as the shareholders holding in excess of a majority of the issued and outstanding voting shares of the Company.
During the period ended December 31, 2023, the Company had the following transactions in its common stock:
| ● | Of shares issued for the conversion of convertible notes
of $ | |
| ● | Of Shares issued to Pacific Capital Markets LLC for
certain for service agreement between Pacific Capital Markets LLC. and the Company. The value of the shares of $ |
Series B Preferred Shares
The Series B Preferred Stock has a stated value of
$100 per share and is convertible into the Company’s common stock at a conversion price of $
As of December 31, 2023 and as of December 31, 2022, there were Series B Preferred Shares outstanding.
Series C Preferred Shares
Each share of Series C Preferred Stock is convertible, at the option of GV, into such number of shares of common stock of the Company as determined by dividing the Stated Value (as defined below) by the Conversion Price (as defined below). The Conversion Price for each share is equal to a 50% discount to the average of the lowest three lowest closing bid prices of the Company’s common stock during the 10-day trading period prior to the conversion with a minimum conversion price of $0.02. The stated value is $11 per share (the “Stated Value”). The Series C Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series C Preferred Stock shall be entitled to one vote for each share of common stock that the Series C Preferred Stock shall be convertible into. GV has contractually agreed to restrict its ability to convert the Series C Preferred Stock and receive shares of the Company’s common stock such that the number of shares of the Company’s common stock held by it and its affiliates after such conversion does not exceed 4.9% of the then issued and outstanding shares of the Company’s common stock.
The issuance of the Series C Preferred Stock was made in reliance upon exemptions from registration pursuant to Section 4(a)(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder. GV is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.
F-30
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
At December 31, 2023 and at December 31, 2022, GV owns Series C Preferred Shares.
Series D Preferred Shares
As of December 31, 2023 and as of December 31, 2022, there are and shares of Series D Preferred Shares outstanding, respectively.
Series G Preferred Shares
As of December 31, 2023 and as of December 31, 2022, there are and shares of Series G Preferred Shares outstanding, respectively.
Series H Preferred Shares
On June 17, 2019, the Company, AltCorp Trading LLC,
a Costa Rica company and a wholly-owned subsidiary of the Company (“AltCorp”), GBT Technologies, S.A., a Costa Rica company
(“GBT-CR”) and Pablo Gonzalez, a shareholder’s representative of GBT-CR (“Gonzalez”), entered into and
closed an Exchange Agreement (the “GBT Exchange Agreement”) pursuant to which the parties exchanged certain securities. In
accordance with the Exchange Agreement, AltCorp acquired shares of GBT-CR representing 25% of its issued and outstanding shares
of common stock from Gonzalez for the issuance of shares of Series H Convertible Preferred Stock of the Company and a Convertible
Note of $
As of December 31, 2023 and as of December 31, 2022, there are shares of Series H Preferred Shares outstanding.
Series I Preferred Shares
On July 20, 2023, the Company through its wholly owned subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic and GBT Tokenize. The 2023 Tokenize Agreement restated and replaced the 2022 Tokenize Agreement. Pursuant to the 2023 Tokenize Agreement, as a result of the contribution of the Technology Portfolio by Tokenize and the subsequent contribution of services for the development of the Technology Portfolio by Tokenize and Magic, GBT Tokenize has been able to continue in operation, which has benefited the Company despite its contribution of 166 million shares of common stock valued at approximately $50,000.
In order to maintain its
50% ownership interest in GBT Tokenize, the Company agreed to contribute its portfolio of intellectual property to GBT Tokenize and issue
to GBT Tokenize shares of Series I Preferred Stock (the “Series I Stock”) with a stated value of $
As of December 31, 2023, there are shares of Series I Preferred Shares outstanding.
F-31
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Treasury Shares
On April 25, 2011, the Company issued a press release
announcing that its Board of Directors approved a share repurchase program. Under the program, the Company is authorized to purchase
up to 200-post-split (1,000,000 pre-split) of its shares of common stock in open market transactions at the discretion of management.
All stock repurchases will be subject to the requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended and other
rules that govern such purchases. As of December 31, 2023, the Company has treasury shares on a cost basis of $
Shares To Be Cancelled
As of December 31, 2013, the Company had repurchased 8-post-split shares (38,000 pre-split) shares of its common shares in the open market, which were returned to treasury. On December 31, 2014, the Company returned 40,000 post-split shares (200,000,000 pre-split shares) to the Company in connection with the dissolution of the licensing agreement with Micrologic.
During the first quarter of 2015, the Company’s counsel, who had previously been issued 32,000 shares as compensation, returned those shares to the Company.
As of December 31, 2023, the Company has shares to be cancelled on a cost basis of $.
Warrants
The following is a summary of warrant activity.
| Weighted | |||||||||||||||||
| Weighted | Average | ||||||||||||||||
| Average | Remaining | Aggregate | |||||||||||||||
| Warrants | Exercise | Contractual | Intrinsic | ||||||||||||||
| Outstanding | Price | Life | Value | ||||||||||||||
| Outstanding, December 31, 2022 | $ | $ | |||||||||||||||
| Granted | |||||||||||||||||
| Forfeited | |||||||||||||||||
| Exercised | |||||||||||||||||
| Outstanding, December 31, 2023 | $ | $ | |||||||||||||||
| Exercisable, December 31, 2023 | $ | $ | |||||||||||||||
Note 16 - Income Taxes
At December 31, 2023 and 2022, the significant components of the deferred tax assets are summarized below:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Deferred income tax asset | ||||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Total deferred income tax asset | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Total deferred income tax asset | $ | $ | ||||||
The valuation allowance increased by $
F-32
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
No income tax expense reflected in the consolidated statements of income for the years 2023 and 2022.
The reconciliation of the effective income tax rate to the federal statutory rate for the years ended December 31, 2023 and 2022 is as follows:
| 2023 | 2022 | |||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||
| Federal statutory rates | $ | ( | ) | % | $ | % | ||||||||||
| State income taxes | ( | ) | % | % | ||||||||||||
| Permanent differences | - | % | ( | ) | - | % | ||||||||||
| Valuation allowance against net deferred tax assets | % | % | ||||||||||||||
| Effective rate | $ | % | $ | % | ||||||||||||
The Company periodically evaluates the likelihood of the realization of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is not judged to be more likely than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors.
Future changes in the unrecognized tax benefit will have no impact on the effective tax rate due to the existence of the valuation allowance. The Company estimates that the unrecognized tax benefit will not change significantly within the next twelve months. The Company will continue to classify income tax penalties and interest as part of general and administrative expense in its consolidated statements of operations. There were no interest or penalties accrued as of December 31, 2023 and 2022.
Note 17 - Related Parties
Related parties are natural persons or other entities that have the ability, directly or indirectly, to control another party or exercise significant influence over the party in making financial and operating decisions. Related parties include other parties that are subject to common control or that are subject to common significant influences.
On October 10, 2019, the Company entered into a Joint
Venture Agreement (the “BitSpeed Agreement”) with BitSpeed LLC, which is owned by Douglas Davis, the prior Company’s
Chief Executive Officer (From January 1, 2019 to April 11, 2020), to form GBT BitSpeed Corp., a Nevada company (“GBT BitSpeed”).
The purpose of GBT BitSpeed is to develop, maintain and support its proprietary Extreme Transfer Software Application Concurrency, a
software application to transfer secure, accelerated transmission of large file data over networks, and connection to cloud storage,
Network-Attached Storage (NAS) and Storage Area Networks (SANs) (“Concurrency”). BitSpeed shall contribute the services and
resources for the development of Concurrency to GBT BitSpeed. The Company shall contribute 10 million shares of common stock of the Company
to GBT BitSpeed. BitSpeed and the Company will each own
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GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
On July 20, 2023, the Company through its wholly
owned subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated
Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize
Corp (“GBT Tokenize”). On March 6, 2020, the Company through Greenwich entered into a Joint Venture and Territorial License
Agreement (the “2020 Tokenize Agreement”) with Tokenize-It, S.A. (“Tokenize”). Under the 2020 Tokenize Agreement,
the parties formed GBT Tokenize and Tokenize contributed its technology portfolio as described in the 2020 Tokenize Agreement with each
Tokenize and the Company owning
In addition to the Technology Portfolio,
Tokenize contributed the services and resources for the development of the Technology Portfolio to GBT Tokenize. The Company
contributed shares
of common stock. On May 28, 2021, the parties agreed to amend the 2020 Tokenize Agreement to expand the territory granted for the
Technology Portfolio under the license to GBT Tokenize to include the entire continental United States. The Company issued GBT
Tokenize an additional shares
of common stock. On June 30, 2021, Tokenize and its shareholder assigned all their rights under the 2020 Tokenize Agreement,
including the Company’s pledged
Yello Partners Inc.
As of December 31, 2023 and as of December 31, 2022,
the Company has $
Alpha Eda Note Payable – Related Party
On November 15, 2020, the Company issued a
promissory note to Alpha Eda, LLC (“Alpha”), a related party, for $
F-34
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Stanley Hills LLC Convertible Note Payable – Prior Related Party
On January 1, 2023, the
Company issued a convertible promissory note to Stanley for its credit balances in the principal amount of $
Stanley Hills LLC Accounts Payable
As of December 31, 2023 and 2022, the Company has
recorded an outstanding payable balance to Stanley amounted $
Consulting income for the year ended December 31,
2023 and for the year ended on December 31, 2022 were $
Note 18 - Legal Proceedings
From time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business. There is currently no litigation that management believes will have a material impact on the financial position of the Company.
TTSG
On or about July 9, 2021 the Company filed a lawsuit in District Court in Clack County Nevada – Department 19 (Case number A-21-837631-C) against Terry Taylor and TTSG Holdings, Inc for breach of contract, breach of covenant of Good Faith and Fair Dealing, Unjust Enrichment and declaratory relief for failure of providing consulting services per contract they entered. The Company is demanding the return of 240,000 shares issued, return of the $5,000 payments, recission of the consulting agreement, and attorney’s fees and costs. As Terry Taylor and TTSG Holdings failed to appear to a notice of deposition, the Company filed for a summary judgment. On January 20, 2023 the court issued a $708,821 writ of execution against Terry Taylor and TTSG
Gregory Mancuso and Rainer AG
On or about February 2, 2022, GBT was served with a First Amended Complaint (the “Complaint”) initiated by Gregory Mancuso and Rainer AG, a Swiss corporation, Case No. 21SMCV01430, filed in the Superior Court of the State of California for the County of Los Angeles. The Complaint names a number of different parties, including GBT, and asserts, among other things, claims for conversion, unjust enrichment, breach of contract, and breach of implied covenant of fair dealing, which Plaintiffs allege arise out of a brokerage agreement entered into between Plaintiff Rainer AG and co-defendant Consul Group re Dos Mil Veintiuno S.R.L (“Consul”). GBT was sued under an alter ego theory of liability, and its only involvement in the above-referenced chain of events seems to be that its shares were deposited with Rainer by Consul upon the opening of the brokerage account. GBT will be filling a demurrer to the First Amended Complaint based on a variety of deficiencies with the First Amended Complaint, and will ask the Court to dismiss the claims against GBT.
Note 19 - Contingencies
GBT Technologies, S.A.
On September 14, 2018, the Company entered into an Exclusive Intellectual Property License and Royalty Agreement (the “GBT License Agreement”) with GBT-CR, a fully compliant and regulated crypto currency exchange platform that currently operates in Costa Rica as a decentralized crypto currency platform, pursuant to which, among other things, the Company granted to GBT-CR an exclusive, royalty-bearing right and license relating intellectual property relating to systems and methods of converting electronic transmissions into digital currency as reflected in that certain patent filed with the United Stated Patent and Trademark Office on or about June 14,
F-35
GBT
TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
2018 (EFS ID: 32893586;
Application Number: 16008069; Type: Utility under 35 USC 111(a); Confirmation Number: 6787)(collectively, the “Digital Currently
Technology”). Pursuant to the GBT License Agreement, the Company granted GBT-CR an exclusive worldwide license to use the Digital
Currency Technology to make, use, sell, lease or otherwise commercialize and dispose of products and devices utilizing the Digital Currently
Technology. Under the terms of the GBT License Agreement, the Company is entitled to receive a royalty payment of 2% of gross revenue
of each licensed product sold by GBT-CR during the period starting in which revenue is first generated using the licensed products and
continuing for five years thereafter. Upon signing the GBT-CR License Agreement, GBT-CR paid the Company $
Stock Loan Receivable
On January 8, 2019, the
Company entered into a Stock Pledge Agreement with Latin American Exchange Latinex Casa de Cambio, S.A., a Costa Rica corporation (“Latinex”),
to provide that Latinex may maintain its required regulatory capital as required by various regulators. The Company pledged restricted
shares of its common stock valued at $
Metaverse Agreements
On June 10, 2022, the Company, entered into a Joint Venture and Territorial License Agreement (the “Metaverse Agreement”) with Ildar Gainulin and Maria Belova (collectively, the “Licensor”). Under the Metaverse Agreement, the parties formed Metaverse Kit Corp., a Nevada corporation (“Metaverse Kit”). The purpose of Metaverse Kit was to develop, maintain and support source codes for its proprietary technologies and comprehensive platform that combines a core virtual reality platform and an extended set of real-world functions to provide a metaverse experience initially within the area of sports and then expanding into virtual worlds of entertainment, live events, gaming, communications and other cross over product opportunities (the “Meta Portfolio”). Under the Metaverse Agreement, Licensor agreed to provide Metaverse Kit with the licensed technology and expertise. In connection therewith, the parties entered an Asset Purchase Agreement (the “Metaverse APA”) concurrently with the Metaverse Agreement whereby Licensor sold Metaverse Kit all source codes pertaining to the Meta Portfolio. Further, Licensor provided an exclusive license to Metaverse Kit throughout the world for the invented product/service and the related platforms relating to the Meta Portfolio and to use the know how to develop, manufacture, sell,
F-36
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
market and distribute the Meta Portfolio throughout
the world. The Company was required to contribute shares of common stock of the Company (“GBT Shares”) to Metaverse
Kit. Licensor and the Company were to each own 50% of Metaverse Kit. The Company pledged its
The closing of the Metaverse Agreement occurred on June 13, 2022.
On March 14, 2023, the Company
received a counter signed Settlement Agreement and Release by Licensor dated March 2, 2023 (“Settlement Agreement”). Pursuant
to the Settlement Agreement, the parties agreed that Metaverse Agreement, the Metaverse APA and the Consulting Agreement are void and
cancelled. Licensor agreed to pay $
On February 1, 2023, the Company engaged AlKhatib Consulting Group to provide exclusive representation services in connect with managing market partners, effective on February 1, 2023 for 24 consecutive months.
Assets Sale - TREN
On April 3, 2023, GBT Tokenize Corp. (“Seller”),
a subsidiary that is owned
On July 18, 2023, TREN changed its name to Avant Technologies, Inc. and its ticker symbol on OTC Markets was changed to AVAI.
Potential IP’s Sale
On April 17, 2023, Bannix Acquisition Corp. (“Bannix”),
EVIE Autonomous Group Ltd. (“EVIE”) and EVIE’s shareholders entered into a Business Combination Agreement pursuant
to which Bannix agreed to acquire EVIE. In addition, Bannix agreed to acquire from GBT Technologies Inc. (the “Company” or
“GBT”), the Apollo System which is intellectual property covered by patent application filed with the US Patent and Trademark
Office. This patent application describes a machine learning driven technology that controls radio wave transmissions, analyzes their
reflections data, and constructs 2D/3D images of stationary and moving objects. The Apollo system is based on radio waves and can detect
an entity’s moving and stationary positions, enabling imaging technology to show these movements and positions on a screen in real
time. This includes an AI technology that controls the radio waves transmission and analyzes the reflections. The goal is to integrate
the Apollo System as an efficient driver monitoring system, detecting impaired or distracted drivers, providing audible and visual alerts
(“the “Patents”). On August 8, 2023, Bannix entered into a Patent Purchase Agreement (“PPA”) with GBT Tokenize
Corp. (“Tokenize”), which is
F-37
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
In accordance therewith, Bannix agrees to pay, issue
and deliver to Tokenize, $
On December 18, 2023, Bannix and Tokenize entered into Amendment No. 1 to the PPA. Per the amendment, Bannix and Tokenize agreed that the shares of common stock to be issued upon conversion of the Series A Preferred Stock will not exceed 19.99% of the aggregate number of shares of common stock issued and outstanding as of the closing of Bannix’s acquisition of EVIE (such maximum number of shares, the “Exchange Cap”) unless Bannix’s stockholders have approved the issuance of shares of common stock upon conversion of the Series A Preferred Stock pursuant to the PPA in excess of the Exchange Cap in accordance with the applicable rules of the market or exchange on which Bannix’s shares of common stock trade.
On March 11, 2024, Bannix sent EVIE and the shareholder of EVIE a notice providing that the BCA has been terminated (“BNIX EVIE Termination Letter”). As the PPA was contingent upon Bannix closing the acquisition of the EVIE and due to the BNIX EVIE Termination Letter, on March 19, 2024 Bannix and Tokenize agreed to terminate the PPA which was consented to by the Company.
Effective as of March 19, 2024, Tokeniz, entered into a Patent Purchase Agreement with VisionWave Technologies Inc. (“VisionWave”) pursuant to which VisionWave agreed to acquire from Tokenize the entire right, title, and interest of certain patents and patent applications providing an intellectual property basis for a machine learning driven technology that controls radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary and in motion objects (“VisionWave PPA”).
The Purchase Price for the asset
is $
Service Agreement
On February 24, 2023 the Company entered into service
agreement with Pacific Capital Markets LLC, where Shares issued to it for certain for service agreement between
Pacific Capital Markets LLC. and the Company. The value of the shares of $
F-38
GBT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
Representation Agreement
On August 17, 2023, Tokenize, which is
Note 20 – Concentrations
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to a concentration of credit risk for the years, consist principally of temporary cash investments. There have been no losses in these accounts through December 31, 2023 and 2022.
Liquidity risk
The Company has an accumulated deficit of $
Customers
Per the Termination Agreement with Mahaser, the Company
did not recognize revenue in the year ended on December 31, 2023. The Consulting income from related party for the year ended December
31, 2023 and 2022 was $
Note 21 - Subsequent Events
Effective as of March 19,
2024, Tokenize, which is
The Purchase Price for the asset
is $
On August 8, 2023, Bannix Acquisition Corp. (“Bannix”)
entered into a Patent Purchase Agreement (“PPA”) with Tokenize, which is
F-39