United States
Securities and Exchange Commission
Washington, D.C. 20549
Form
| (Mark One) | |
| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended |
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commissions file number:
(Exact name of registrant as specified in its charter)
| State or other jurisdiction of | I.R.S. Employer Identification Number |
| incorporation or organization |
(Address of principal executive offices)
| Issuer ’s telephone number: |
Securities registered pursuant to Section 12(b) of the Act: Not applicable.
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Not applicable. |
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| 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 is a
shell company (as defined in Rule 12b-2 of Exchange Act). Yes
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
| Common Stock, $0.00001 par value | Common Shares |
| (Class) | (Outstanding at November 20, 2023) |
GBT TECHNOLOGIES INC.
TABLE OF CONTENTS
1
Item 1: Condensed consolidated financial statements
| GBT TECHNOLOGIES INC. |
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
| ASSETS | September 30, | December 31, | ||||||
| 2023 | 2022 | |||||||
| (Unaudited) | (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 (including related parties of $ | $ | $ | ||||||
| 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 September 30, 2023 and December 31, 2022, respectively | ||||||||
| Series C Preferred stock, $ par value; shares authorized; and shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | ||||||||
| Series D Preferred stock, $ par value; shares authorized; and shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | ||||||||
| Series G Preferred stock, $ par value; shares authorized; and shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | ||||||||
| Series H Preferred stock, $ par value ($500.00 stated value); shares authorized; and shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | ||||||||
| Treasury stock, at cost; shares at September 30, 2023 and December 31, 2022, respectively | ( | ) | ( | ) | ||||
| Stock loan receivable | ( | ) | ( | ) | ||||
| 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 following audited balances were updated to reflect the discontinued operations of Mahaser Ltd.
The accompanying footnotes are an integral part of the unaudited condensed consolidated financial statements.
2
GBT TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited/As Restated)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022* | 2023 | 2022* | |||||||||||||
| Sales - related party | $ | $ | $ | $ | ||||||||||||
| Total sales | ||||||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Marketing expenses | ||||||||||||||||
| Professional expenses | ||||||||||||||||
| 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 | ||||||||||||||||
| Gain on bad debt | ||||||||||||||||
| Gain on loss of control | ||||||||||||||||
| Change in fair value of marketable securities | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income - related party licensing income | ||||||||||||||||
| Total other income (expense) | ( | ) | ||||||||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ||||||||||||||||
| 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 loss per share (basic and diluted): | ||||||||||||||||
| Basic | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Diluted | ( | ) | ( | ) | ||||||||||||
*The following unaudited balances were updated to reflect the discontinued operations of Mahaser Ltd.
The accompanying footnotes are an integral part of the unaudited condensed consolidated financial statements.
3
| GBT TECHNOLOGIES INC. |
| CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT |
| (Unaudited/As Restated*) |
| Stock | Additional | Total | ||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Loan | Paid-in | Accumulated | Noncontrolling | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Receivable | Capital | Deficit | Interest | Deficit | ||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common stock issued for conversions | — | |||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | ||||||||||||||||||||||||||||||||||
| Common stock issued for Service | — | |||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common stock issued for conversions | — | |||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common stock issued for conversions | — | |||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
4
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common stock issued for conversion of convertible debt and accrued interest | — | |||||||||||||||||||||||||||||||||||
| Fair value of beneficial conversion feature of converted | — | — | ||||||||||||||||||||||||||||||||||
| Common stock issued for cash | — | |||||||||||||||||||||||||||||||||||
| Net loss | — | — | ||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common stock issued for conversions | — | |||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | ||||||||||||||||||||||||||||||||||
| Common stock issued for cash | — | |||||||||||||||||||||||||||||||||||
| Common stock issued for JV - Tokenize | — | ( | ) | |||||||||||||||||||||||||||||||||
| Equity Method Investment - Meta | — | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common stock issued for conversions | — | |||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2022* | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
*The following unaudited balances were updated to reflect the discontinued operations of Mahaser Ltd.
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
5
GBT TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the nine months Ended September 30, | ||||||||
| 2023 | 2022 (As Restated*) | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Loss from continuing operations | $ | ( |
) | $ | ||||
| Less: Loss from discontinued operations, net of tax | ( |
) | ||||||
| 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 | ( |
) | ||||||
| Loss on loss of control | ( |
) | ||||||
| Gain on debt settlement | ( |
) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Account receivable | ( |
) | ||||||
| Other receivable | ( |
|||||||
| Prepaid | ||||||||
| Inventory | ( |
) | ||||||
| Inventory in transit | ( |
) | ||||||
| Unearned revenue | ( |
) | ( |
) | ||||
| Contract liabilities | ( |
) | ( |
) | ||||
| 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 following unaudited balances were updated to reflect the discontinued operations of Mahaser Ltd.
| The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements. |
6
GBT Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
For the Nine Months Ended September 30, 2023 and 2022 (Unaudited)
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 unaudited condensed financial statements (“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
7
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.
| ● | 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 – 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 September 30, 2023:
| Carrying amounts of assets included as part of discontinued operations: | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable, net | ||||
| Inventory | ||||
| Other current assets | ||||
| 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 | $ |
The financial results of Mahaser Ltd. are present as income from discontinued operations, net of income taxes on our consolidated income through September 30, 2023, when our deconsolidation occurred. The following table presents the financial results of Mahaser:
8
| Period ended September 30, | ||||||||
| 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 3 – 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 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.
9
Principles of Consolidation
The accompanying CFS include the accounts of the Company and its subsidiaries; the Company’s 50% owned subsidiaries GBT Tokenize Corp. (active) and GBT BitSpeed Corp (currently inactive); the Company’s 50% owned subsidiary, 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.
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.
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 September 30, 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 September 30, 2023 and December 31, 2022, the Company did
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.
Inventory
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.
10
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 September 30, 2023 and December 31, 2022, 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. |
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.
11
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.
As disclosed before, the Company entered into a Termination Agreement with Mahaser effective July 1, 2023. At September 30, 2023 and December 31, 2022, the Company identified the following liabilities that are required to be presented on the balance sheet at FV:
| Description | Fair Value As of September 30, 2023 |
Fair Value Measurements at September 30, 2023 Using Fair Value Hierarchy | ||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||
| Conversion feature on convertible notes | $ | $ | $ | $ | ||||||||||||
| Description | Fair Value As of December 31, 2022 |
Fair Value Measurements at December 31, 2022 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.
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:
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| ● | 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 – (Include up to September 30, 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.
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 $
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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.
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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 June 30, 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 June 30, 2023 (after elimination of intercompany transactions and balances) consist of: | ||||
| Current assets: | ||||
| Cash and equivalents | $ | |||
| Accounts Receivable | ||||
| Inventory | ||||
| Other current asset | ||||
| Total current assets | $ | |||
| 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 | $ | |||
| 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 | $ | |||
| Cost of goods sold | ||||
| Gross profit | ( | ) | ||
| General and administrative expenses | ||||
| Net Income | $ | ( | ) | |
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| 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 | $ | |||
| Inventory | ||||
| Due From related party | ||||
| Total current assets | $ | |||
| 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 | $ | |||
| 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 | $ | |||
| Cost of goods sold | ||||
| Gross profit | ||||
| General and administrative expenses | ||||
| Net Loss | $ | |||
The periods ended on September 30, 2023 and December 31, 2022 does not include the result of operation by Mahaser, as it ceases being VIE.
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.
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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.
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.
| September 30, | 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 September 30, 2023, through the date which the CFS are issued. Based upon the review, other than described in Foot Note – 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.
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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 period ended September 30, 2023.
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 period ended September 30, 2023.
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.
Note 5 – Cash, Restricted Cash, and Cash held in Trust
Cash consist of amounts held as bank deposits, amounts held in escrow and highly liquid debt instruments purchased with an original maturity of three months or less.
From time to time, we may
maintain bank balances in interest bearing accounts in excess of the $
Note 6 – 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 $
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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 shares of common
stock of TGHI in the FV of $
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 none 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
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As of September 30, 2023
the notes had an outstanding balance of $
As of September 30, 2023 and December 31, 2022, the
marketable security had a FV of $
Note 7 – Avant Investment
On April 3, 2023, GBT Tokenize Corp. (“Seller”),
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.
As APA is contingent per the Lock Up Term that all transactions contemplated by the APA maybe unwound, management did not record the transaction.
Note 8 – Impaired Investment
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 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.
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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.
Investment in Joint Venture – GBT Tokenize Corp
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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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 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 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 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 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 million shares of common stock valued at
approximately $
22
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 September 30, 2023 and December 31, 2022, was $
Note 9 – Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at September 30, 2023 and at December 31, 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 September 30, 2023 and at December 31, 2022 consist of the following:
| September 30, | 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 | $ | $ | ||||||
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$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 September
30, 2023,
As of September
30, 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 $
24
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
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 June 30, 2023, the company
paid back $
As of September 30, 2023,
the note had an outstanding balance of $
25
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
$
As of September 30, 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
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As of September 30, 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 September
30, 2023, 1800 Diagonal converted $
As of September 30, 2023,
the note had an outstanding balance of $
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 $
27
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 September 30, 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 September 30, 2023,
the note had an outstanding balance of $
Convertible notes payable – prior related parties at September 30, 2023 and December 31, 2022 consist of the following:
| September 30, | 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 | $ | $ | ||||||
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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 September 30, 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 September 30, 2023 is below:
| Convertible notes payable, December 31, 2022 | $ | |||
| Issued for cash | ||||
| Convertible note issued for accounts payable | ||||
| Payment with cash | ( | ) | ||
| Conversion to common stock | ( | ) | ||
| Other settlement | ( | ) | ||
| Convertible notes payable, September 30, 2023 | $ |
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Note 12 - Notes Payable, Non-related Parties and Related Party
Notes payable, non-related parties at September 30, 2023 and December 31, 2022 consist of the following:
| September 30, | 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
Notes payable, related party at September 30, 2023 and December 31, 2022 consist of the following:
| September 30, | 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 | $ | $ | ||||||
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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 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 September 30, 2023 and at December 31, 2022 was $
Discounts on Promissory Note
The Company recognized debt discount of $
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 prior Note - 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).
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The Company uses a weighted average Black-Scholes option pricing model with the following assumptions to measure the FV of derivative liability at September 30, 2023 and at December 31, 2022:
| September 30, | 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 September 30, 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, March 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.
| ● | 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 |
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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 September 30, 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 September 30, 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.
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At September 30, 2023 and at December 31, 2022, GV owns Series C Preferred Shares.
Series D Preferred Shares
As of September 30, 2023 and as of December 31, 2022, there are and shares of Series D Preferred Shares outstanding, respectively.
Series G Preferred Shares
As of September 30, 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 September 30, 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.
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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 September 30, 2023, there are shares of Series I Preferred Shares outstanding.
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, September 30, 2023 | $ | $ | |||||||||||||||
| Exercisable, September 30, 2023 | $ | $ | |||||||||||||||
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Note 16 - 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
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
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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
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
Yello Partners Inc.
As of September 30, 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 $
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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 $
As of September 30, 2023, the Company has recorded
an outstanding payable balance to Stanley amounted $
Consulting income for the period ended September 30,
2023 and for the year ended on December 31, 2022 were $
Note 17 - 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, 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 $
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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, 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
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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