UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
Commission file number
(Exact Name of registrant as specified in its charter)
| ||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification Number) |
(Address of principal executive offices, including zip code.)
(Telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None.
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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging grown 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 the Exchange Act). Yes
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date:
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5 |
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| Condensed Consolidated Balance Sheets as on March 31, 2025 and December 31, 2024 | 5 |
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| Notes to the Condensed Consolidated Financial Statements (Unaudited) | 10 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 36 |
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| Table of Contents |
Glossary of Industry Terms
The following are abbreviations, acronyms and definitions of certain terms used in this document, which are commonly used in our industry:
“BEPS” means base erosion and profit shifting, which are tax planning strategies that exploit gaps and mismatches in national tax laws to shift profits to low or no tax locations.
“CESTAT” means Pakistan’s Customs, Excise and Sales Tax Appellate Tribunal.
“CIR” means Commissioner Inland Revenue is the commissioner of Pakistan’s Federal Board of Revenue.
“DPLC” means domestic private lease circuits, a private, point-to-point connection between two locations within a country, ensuring exclusive use of bandwidth.
“ECA” means the U.S. Export Control Reform Act of 2018.
“FCPA” means the U.S. Foreign Corrupt Practices Act.
“Fiber” thin flexible fibers of glass or other transparent solids used to transmit light signals for telecommunications.
“FTTH” means fiber to the home, a broadband internet technology that uses optical fiber to deliver high-speed internet directly to individual buildings.
“GoP” means the Government of Pakistan.
“IT” means information technology.
“LDI” means the Company’s 55% owned subsidiary, WorldCALL Public’s Long Distance & International network.
“LHC” means the Honorable Lahore High Court.
“MoIT&T” means Pakistan lies with the Ministry of Information Technology and Telecommunication.
“OECD” means Organization for Economic Co-operation and Development.
“OLT” means optical line termination, a piece of hardware in a PON, acting as the service provider's endpoint, converting electrical signals to optical signals for transmission over fiber optic cables and managing data traffic to multiple subscribers.
“ONT” means optical network termination, a device that serves as the endpoint of an optical network, connecting users to the network.
“Ordinance” means Pakistan’s Income Tax Ordinance, 2001.
“PEMRA” means the Pakistan Electronic Media Regulatory Authority.
“PON” means passive optical network, a fiber-optic telecommunications network that uses only unpowered devices to carry signals.
“PTA” means the Pakistan Telecommunications Authority.
“Telecommunications Act” means the Pakistan Telecommunications (Re-organization) Act, 1996, as amended.
“Telecommunications Rules” means the rules and regulations made under the Telecommunications Act.
“ARD” means annual regulatory dues.
“VOIP” means voice over internet protocol.
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| Table of Contents |
Cautionary Note Regarding Forward-Looking Statements.
Certain of the matters we discuss in this quarterly report may constitute forward-looking statements. You can identify forward-looking statements because they contain words such as “believes”, “expects”, “may”, “will”, “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates”, “anticipates”, or similar expressions which concern our strategy, plans or intentions. All statements we make relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. All of these forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those we expected. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. There may be other factors not presently known to us or which we currently consider to be immaterial that may cause our actual results to differ materially from the forward-looking statements.
Forward-looking statements include, but are not limited to, statements about:
| · | our need for additional capital, the terms of such capital and potential dilution caused thereby; |
| · | the fact that we are exposed to foreign currency exchange loss, fluctuation and translation risks related to our business in Pakistan; |
| · | the international economic environment, geopolitical developments and unexpected global events could cause our business to decline; |
| · | the fact that emerging markets, where our operations are located, are subject to greater risks than investing in more developed markets, including significant political, legal and economic risks; |
| · | the unpredictability of our revenue performance due to the fact that a large majority of our customers have not entered into long-term fixed contracts with us; |
| · | our ability to compete in highly competitive markets, which we expect only to become more competitive, and as a result, we may have difficulty expanding our customers base or retaining existing customers; |
| · | our ability to keep pace with technological changes and evolving industry standards, which could harm our competitive position and, in turn, materially harm our business; |
| · | cyber-attacks and other cybersecurity threats that may lead to compromised or inaccessible telecommunications, digital and financial services, and/or leaks or unauthorized processing of confidential information, which may cause customers to lose confidence in our services; |
| · | the highly capital-intensive nature of the telecommunications industry, which requires substantial and ongoing expenditures of capital; |
| · | the terms of our interconnect agreements and access to third-party-owned infrastructure and networks, over which we have no direct control; |
| · | increases in license fees; |
| · | risks related to our ability to continue to conduct our activities in a manner so as to not be deemed an investment company under the Investment Company Act of 1940, as amended; |
| · | the loss of important intellectual property rights, as well as third-party claims that we have infringed on their intellectual property rights; |
| · | our substantial amounts of indebtedness and debt service obligations; |
| · | our ability to keep ownership control of Worldcall Telecom Limited; |
| · | conflicts of interest; |
| · | our ability to comply with an extensive variety of laws and regulations; |
| · | the fact that our operating subsidiaries, assets and certain of our officers and directors are located in Pakistan; |
| · | the outcome of legal disputes, claims and litigation; |
| · | our ability to obtain and maintain licenses; |
| · | economic downturns both in Pakistan and globally, changes in inflation and interest rates, increased costs of borrowing associated therewith and potential declines in the availability of such funding; |
| · | risks relating to future divestitures, asset sales, joint ventures and acquisitions; |
| · | future operating results; and |
| · | other plans, objectives, expectations and intentions contained in this Report that are not historical. |
All forward-looking statements and projections attributable to us or persons acting on our behalf apply only as of the date of this Report and are expressly qualified in their entirety by the cautionary statements included in this Report. We undertake no obligation to publicly update or revise any written or oral forward-looking statements made by us or on our behalf, including any of the projections presented herein, to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.
As used in this report, the terms “we”, “us”, “our” and the “Company”, refer to GlobalTech Corporation, a Nevada corporation and its consolidated subsidiaries. The Company serves as a holding company for its consolidated subsidiaries discussed in greater detail below.
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| Table of Contents |
PART I.
Item 1. Financial Statements.
GLOBALTECH CORPORATION | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
As of March 31, 2025 and December 31, 2024 | ||||||||
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| December 31, |
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| 2025 |
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| 2024 |
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ASSETS |
| (Unaudited) |
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Current assets: |
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Cash and cash equivalents |
| $ |
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| $ |
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Restricted cash |
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Accounts receivable – net |
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Short term investments |
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Prepayments |
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Stores and spares |
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Loans and advances |
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Other receivables |
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Total current assets |
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Property, plant and equipment |
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Operating lease right-of-use assets |
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Intangible assets – net |
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Long term loans and other assets |
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Deferred tax asset |
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TOTAL ASSETS |
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| $ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Trade and other payables |
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Current portion of non-current liabilities |
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Accrued interest |
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Short term borrowings |
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Provision for taxation – net |
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Total current liabilities |
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Term finance certificates |
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Long term financing – secured |
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Long term deposits and payable |
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License fee payable |
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Operating lease liability |
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Post employment benefits |
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Other payables |
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Total non- current liabilities |
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TOTAL LIABILITIES |
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| $ |
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CONTINGENCIES AND COMMITMENTS |
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SHAREHOLDERS' EQUITY: |
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Common stock, $ |
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Accumulated other comprehensive loss |
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| ( | ) |
Accumulated deficit |
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| ( | ) |
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Non-Controlling interest |
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TOTAL SHAREHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $ |
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| $ |
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The accompanying consolidated notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||
| 5 |
| Table of Contents |
GLOBALTECH CORPORATION |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
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FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 |
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| 2025 |
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| 2024 |
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NET REVENUE |
| $ |
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| $ |
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Direct operating costs |
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| ( | ) |
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Other operating costs |
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Depreciation and amortization |
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Other expenses |
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OPERATING LOSS |
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OTHER: |
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Other income |
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Finance cost |
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LOSS BEFORE TAXATION |
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Taxation |
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| ( | ) |
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| ( | ) |
NET LOSS |
| $ | ( | ) |
| $ | ( | ) |
NET LOSS ATTRIBUTABLE TO: |
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Common shareholders of GlobalTech Corporation |
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Non-controlling interest (NCI) |
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Net loss per common share: basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
Weighted-average common shares used to compute basic and diluted loss per share |
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The accompanying consolidated notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||
| 6 |
| Table of Contents |
GLOBALTECH CORPORATION | |||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) | |||||||||||||||||||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 | |||||||||||||||||||||||
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| 2025 |
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| 2024 |
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NET LOSS |
| $ | ( | ) |
| $ | ( | ) |
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Items that will not be reclassified to profit or loss: |
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Changes in fair value of financial assets through other comprehensive income |
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Foreign currency translation adjustment |
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Other Comprehensive income - net of tax |
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COMPREHENSIVE LOSS |
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COMPREHENSIVE LOSS ATTRIBUTABLE TO: |
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Common shareholders of GlobalTech Corporation |
| $ | ( | ) |
| $ | ( | ) |
Non - controlling interest (NCI) |
|
| ( | ) |
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| ( | ) |
Comprehensive Loss attributable to GLOBALTECH |
|
| ( | ) |
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| ( | ) |
The accompanying consolidated notes are an integral part of these unaudited condensed consolidated financial statements. |
| 7 |
| Table of Contents |
GLOBALTECH CORPORATION | ||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) | ||||||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 | ||||||||||
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| 2025 |
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| 2024 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
| $ | ( | ) |
| $ | ( | ) | ||
Adjustment for non-cash charges and other items: |
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Depreciation and amortization |
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Interest accretion on liabilities |
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Liabilities written back on settlements with parties |
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Post-employment benefits |
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Income on deposits, advances and savings accounts |
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Exchange loss on liabilities |
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Changes in operating assets and liabilities: |
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Stores and spares |
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Trade debts |
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Loans and advances |
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Short term investment |
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Prepayments |
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Other receivables |
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Trade and other payables |
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Increase / (Decrease) in non-current liabilities and assets: |
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Long term deposits and payables |
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Other payables |
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Long term loans and other assets |
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Post employment benefits paid |
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Income on deposit and savings accounts |
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Lease rental payments |
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Finance cost paid |
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Income tax paid |
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Net cash (used in)/generated from operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Proceeds from disposal (Payment on purchase) of property and equipment – net |
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Net cash used in investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Repayment of long-term financing |
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Payment against directors' loan |
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Net cash used in financing activities |
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Net (decrease)/increase in Cash and Cash Equivalents |
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Cash and Restricted Cash at the beginning of the Period |
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Exchange effect |
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Cash and Restricted Cash at the End of the Period |
| $ |
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| $ |
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SUPPLEMENTAL INFORMATION - Cash paid during the period for: |
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Income taxes |
| $ | ( | ) |
| $ | ( | ) | ||
Interest |
| $ | ( | ) |
| $ | ( | ) | ||
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The cash and cash equivalent comprises of the following: |
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Cash and cash equivalent |
| $ |
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| $ |
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Restricted cash |
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| $ |
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| $ |
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The accompanying consolidated notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||||
| 8 |
| Table of Contents |
GLOBALTECH CORPORATION
CONDENSED CONSOLIDATED SHAREHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,2025 AND 2024 |
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| Common Share |
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| Accumulated Other Comprehensive Income |
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Description |
| Shares |
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| Amount |
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| Other Comprehensive Loss |
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| Translation Reserve |
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| Total |
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| Accumulated Deficit |
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| Non- Controlling Interest |
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| Total |
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Balance as of January 1, 2025 |
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| $ |
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| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
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| $ |
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Net loss attributable for the three months ended March 31, 2025 |
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| - |
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| ( | ) |
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| ( | ) |
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Other comprehensive loss for the three months ended March 31, 2025 |
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| - |
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Total comprehensive loss for the three months ended March 31, 2025 |
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| - |
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Balance as at March 31, 2025 |
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| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ |
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| $ |
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Balance as at January 1, 2024 |
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| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
|
| $ |
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Net loss attributable for the three months ended March 31, 2024 |
|
| - |
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| ( | ) |
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| ( | ) |
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Other comprehensive income for the three months ended March 31, 2024 |
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| - |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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Total comprehensive income for the three months ended March 31, 2024 |
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| - |
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| ( | ) |
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Balance as at March 31, 2024 |
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The accompanying consolidated notes are an integral part of these unaudited condensed consolidated financial statements.
| 9 |
| Table of Contents |
GLOBALTECH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 (UNAUDITED)
1. ORGANIZATION AND BUSINESS
GlobalTech Corporation (the “Company”) is a Nevada Corporation, incorporated with the name of Elko Broadband Inc (“EBI”) on December 12, 2017. The Company changed its name on March 23, 2022, to GlobalTech Corporation following a plan of reorganization as disclosed in note 1.1. GlobalTech Corporation is a broadband company and provides broadband services.
1.1 A Plan and Agreement of Reorganization between Worldcall Holding Inc. and GlobalTech Corporation.
A Plan and Agreement of Reorganization dated December 31, 2021, has been entered into by and between Elko Broadband Inc., (now as GlobalTech Corporation) and Worldcall Holding Inc.(“WHI”), wherein the transfer of all assets, properties and liabilities of WHI, were exchanged for
The Plan and Agreement of Reorganization was accounted for as a reverse acquisition where EBI was a legal acquirer (the accounting acquiree) and WHI was a legal acquiree (the accounting acquirer).
The transaction has been consummated and trading of the Company’s common stock on the over the counter (OTC) market commenced on April 24, 2024.
1.2. Legal Subsidiaries
1.2.1. WorldCall Telecom Limited
The Company owns directly and indirectly through associates an aggregate of around
WTL is a public limited Company, incorporated in Pakistan on March 15, 2001, under the repealed Companies Ordinance, 1984 (now the Companies Act, 2017). Its shares are quoted on the Pakistan Stock Exchange. WTL commenced its operations on December 1, 2004, and is engaged in providing Wireless Local Loop (“WLL”) and Long Distance & International (“LDI”) services in Pakistan; re-broadcasting international/national satellite/terrestrial wireless and cable television and radio signals; interactive communication and establishing, maintaining and operating the licensed telephony services. The Company and its subsidiaries (the “Group”) have been licensed by Pakistan Telecommunication Authority (“PTA”) and Pakistan Electronic Media Regulatory Authority (“PEMRA”) for these purposes. WTL is domiciled in Pakistan and its principal place of business is situated at Plot # 112-113, Block S, Quaid -e Azam Industrial Estate, Kot Lakhpat, Lahore.
1.2.2. WorldCall Services (Pvt) Limited
WorldCall Services (Private) Limited (“WSL”), a wholly-owned subsidiary of the Company, was incorporated on October 5, 2009, as a private limited Company in Pakistan, under the Companies Ordinance 1984 (Repealed) now the Companies Act, 2017. The objectives of WSL include, but are not limited to, carrying on and undertaking the business of providing channel placement services, payphone services and generating revenue from communication services. The registered office of WSL is situated at Plot # 112-113, Block S, Quaid -e Azam Industrial Estate, Kot Lakhpat, Lahore, Pakistan.
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1.2.3. Ferret Consulting - (FZC)
Ferret Consulting (FZC), a wholly-owned subsidiary of the Company, is a limited liability company registered in Emirates of Ajman, UAE as a Free Zone Company, in accordance with the Free Zone laws and regulations enforced in the Emirates of Ajman, U.A.E. It was registered on August 24, 2016 and commenced operations thereon. The objectives of the Company include management consultancy and technology services.
1.2.4. Rout 1 Digital (Pvt) Limited
Route 1 Digital is a private limited company, a wholly-owned subsidiary of Worldcall Telecom Limited, incorporated under the Companies Ordinance 1984 (now the Companies Act, 2017) on December 21, 2016. The primary business is to carry out the business of all transport services, sharing motor vehicle transportation with another or others, and consultancy in the field of information technology, software development and all activities ancillary thereto. The registered office of the Company is situated at Plot # 112-113, Block S, Quaid -e Azam Industrial Estate, Kot Lakhpat, Lahore, Pakistan.
2. BASIS OF PREPARATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation — The financial information presented in the accompanying unaudited condensed consolidated financial statements, has been prepared in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements and notes include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the condensed consolidated financial position, results of operations, comprehensive loss and cash flows for the periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto, including the Company’s accounting policies for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed on March 27, 2025 with the SEC. The results of the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, for other interim periods, or for future years.
Basis of Consolidation — The Company’s unaudited interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These financial statements include the operating results and financial condition of GlobalTech Corporation, its wholly-owned subsidiaries; WSL (acquired on November 2021), Ferret Consulting FZC (acquired on November 2021), its majority-owned subsidiary WTL, and Route 1 Digital (Pvt) Limited. All intercompany accounts and transactions have been eliminated in consolidation.
Significant Accounting Policies:
Revenue Recognition — We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized upon transfer of control of promised goods and services to customers in an amount that reflects the consideration we expect to receive in exchange for those services. We enter contracts that can include various combinations of services, which are generally capable of being distinct and accounted for as separate performance obligations.
We derive revenue from seven primary sources: (1) International Termination Services, (2) Indefeasible Right of Use (IRU) Services, (3) Cable TV and Internet Services, (4) Metro Fiber Solutions, (5) Capacity Sale Services, (6) Advertisement Services, and (7) Technology Services. All of our revenue arrangements are based on contracts with customers. Most of our contracts with customers contain single performance obligations, although certain contracts do contain multiple performance obligations where we perform more than one service for the same customer. We account for individual performance obligations separately if they are distinct within the context of the contract. For contracts where we provide multiple services such as where we perform multiple ancillary services, each service represents its own performance obligation. Selling or transaction prices are based on the contractual prices for each service at its stand-alone selling price.
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A five-step approach is applied in the recognition of revenue under ASC 606: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when we satisfy a performance obligation.
Payment of invoices is due as specified in the underlying customer agreement, typically advance payments to 30 days from the invoice date, which occurs on the date of transfer of control of the services to the customer. Since payment terms are less than a year, we have elected the practical expedient and do not assess whether a customer contract has a significant financing component. The Company’s revenue arrangements generally do not include a general right of refund for services provided.
Direct Operating Costs — Direct operating costs consist primarily of salaries and benefits related to personnel who provide services to clients, annual Pakistan Telecommunication Authority (PTA) fees, cable license fees and other direct costs related to the Company’s services. Costs associated with the implementation of new clients are expensed as incurred.
Other Operating Costs — Other operating costs consist primarily of compensation and benefits, travel and advertising expenses and are expensed as incurred.
Business Combinations – The Company accounts for business combinations under the provisions of ASC 805, Business Combinations. Such transactions between entities under common control are accounted for under provisions of ASC 805-50. Transfer of business among entities under common control is accounted for transactions by combining carrying amounts of the assets, liabilities, and equity of the combining entities as of the date of the combination. The financial statements reflect the assumption that the combining entities have been operating as a single economic entity throughout the period of common control. No fair value adjustments are made to the carrying amounts of the combining entities’ assets, liabilities, and equity, as the transaction is considered a transfer of ownership interests between entities under common control. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred.
Income Taxes — Income tax expense includes U.S., Pakistan and other international income taxes, and interest and penalties on uncertain tax positions. Certain income and expenses are not reported in tax returns and financial statements in the same year. The tax effect of such temporary differences is reported as deferred income taxes. Deferred tax assets are reported net of a valuation allowance when it is more likely than not that a tax benefit will not be realized. All deferred income taxes are classified as long-term.
Short Term Investments —Investments – Debt and Equity Securities. Investments in marketable debt securities with maturities greater than three months but less than one year at the time of purchase and are classified based on management’s intent regarding these assets as available-for-sale securities. Securities that the Company may sell in response to liquidity needs or changes in interest rates are classified as available-for-sale. They are reported at fair value, with unrealized gains and losses excluded from net income and recorded in other comprehensive income (OCI) within equity, net of applicable taxes. Realized gains and losses, along with other-than temporary impairments, are included in earnings and are determined using the specific identification method.
Our investments in marketable equity securities are measured at fair value with the related gains and losses, including unrealized, recognized in other income (loss).
Fair Value Measurements — ASC 820, Fair Value Measurement, requires the disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. The Company follows a fair value measurement hierarchy to measure financial instruments. The fair value of the Company’s financial instruments is measured using inputs from the three levels of the fair value hierarchy as follows:
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets.
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.
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These financial instruments are subject to fair value adjustments only in certain circumstances and include cash, accounts receivable, accounts payable, borrowings under term loans and line of credit, and other payables. Due to the short-term nature of these financial instruments and that the borrowings bear interest at prevailing market rates, the carrying value approximates the fair value.
Stores and spares
Stores and spares are stated at the lower of cost or net realizable value. Cost is principally determined using the weighted-average method. The Company records adjustments to stores and spares for excess quantities, obsolescence or impairment when appropriate to reflect at net realizable value.
Periodic physical counts and stores and spares reviews are conducted to assess the condition and usability of stores and spares. Provisions are recorded for obsolete, slow-moving, or damaged items when necessary, and such provisions are charged to the statement of operations.
Accounts Receivable - net — Accounts receivable are stated at their net realizable value. Accounts receivable are presented on the consolidated balance sheet net of credit losses, which is established based on reviews of the accounts receivable aging, an assessment of the customer’s history and current creditworthiness, and the probability of collection. Accounts are written off when it is determined that collection of the outstanding balance is no longer probable.
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. The guidance in ASU 2016-13 replaces the incurred loss impairment methodology under current GAAP. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments. It will apply to all entities. For trade receivables, loans, and held-to-maturity debt securities, entities will be required to estimate lifetime expected credit losses. This may result in the earlier recognition of credit losses. In November 2024, the FASB issued ASU No. 2019-10, which delays this standard’s effective date for SEC smaller reporting companies to the fiscal years interim periods beginning on or after December 15, 2022. The Company adopted the new guidance on January 1, 2023 and the adoption of this new guidance had no material impact on the consolidated financial statements. As per the new guidance accounts receivable are presented on the consolidated balance sheet net of an allowance for credit losses, which is established based on reviews of the accounts receivable aging, an assessment of the customer’s history and current creditworthiness, and the probability of collection. The Company routinely reviews its receivables and makes provisions for the credit losses utilizing the Current Expected Credit Losses model (“CECL”). The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. However, those provisions are estimates and actual results may materially differ from those estimates. Trade receivables are deemed uncollectible and are removed from accounts receivable and the allowance for credit losses when collection efforts have been exhausted.
Property, Plant, and Equipment — Tangible assets classified as property, plant, and equipment are stated at cost less accumulated depreciation and any identified impairment loss. Additions are stated at cost less accumulated depreciation and any identified impairment loss. Cost in relation to self-constructed assets includes the direct cost of material, labor, and other allocable expenses.
Depreciation on owned assets is charged to the statement of profit or loss account on the straight-line method to write off the cost or revalued amount of an asset over its estimated useful life.
Depreciation on additions is charged from the month in which the assets are available for use while no depreciation is charged in the month in which the assets are disposed of.
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The depreciation method, residual value, and useful lives of assets are reviewed at least at each financial year end and adjusted if the impact on depreciation is significant.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
The gain or loss on disposal of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as income or expense.
Loans and advances — Loans to employees are provided as per the Company’s policies and are secured against their gratuity and are adjusted against the provision of adjustments.
Advances to vendors are provided for provision of goods and services and they are secured either by a security deposit or a legally enforceable right to recover.
Loans and advances are carried at fair value through profit or loss and are initially recognized at fair value and transaction costs are expensed in the statement of profit or loss account. The fair value is determined using inputs observable in the market, which are classified as level 2 in the fair value hierarchy. They are considered a non-recurring fair value measurement and are measured at fair value. The fair value measurement considers market interest rates and the creditworthiness of the borrowers or other parties.
Long term loans and other assets — Loans and other assets including deposits are provided to different parties and vendors which are recoverable either through a security deposit or a legally enforceable right.
These assets are carried at fair value through profit or loss and are initially recognized at fair value and transaction costs are expensed in the statement of profit or loss account. The fair value is determined using inputs observable in the market, which are classified as level 2 in the fair value hierarchy. They are considered a non-recurring fair value measurement and are measured at fair value on a recurring basis. The fair value measurement considers market interest rates and the creditworthiness of the borrowers or other parties.
Intangible Assets — Intangible assets, licenses, software and right of use assets, are subject to amortization and are amortized using the straight-line method over their estimated period of benefit. The recoverability of intangible assets is evaluated periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.
Evaluation of Long-Lived Assets — The Company reviews its long-lived assets for impairment whenever changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the sum of undiscounted expected future cash flows is less than the carrying amount of the asset group, the Company will recognize an impairment loss based on the fair value of the asset.
There was no impairment of internal-use software costs, intangible assets or property and equipment during the three months ended March 31, 2025 and 2024.
Leases - We account for lease arrangements in accordance with ASC 842, Leases. An arrangement is determined as a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our consolidated balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.
Earnings Per Share — The Company calculates earnings per share (EPS) in accordance with ASC Topic 260, “Earnings Per Share.” Basic EPS is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts that are potentially dilutive were exercised or converted into common stock.
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The Company presents both basic and diluted EPS on the face of the income statement. The Company also provides a reconciliation of the numerator and denominator used in the EPS calculations in the footnotes to the financial statements, in case of any change occurred during the year.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares.
Foreign Currency Translation — The financial statements of the Company’s foreign subsidiaries are translated from their functional currency into U.S. dollars, the Company’s functional currency. All foreign currency assets and liabilities are translated at the period-end exchange rate, and all revenue and expenses are translated at average exchange rates. The effects of translating the financial statements of the foreign subsidiaries into U.S. dollars are reported as a cumulative translation adjustment, a separate component of accumulated other comprehensive income/(loss) in the consolidated statements of shareholders’ equity. Foreign currency transaction gains/losses are reported as a component of other income–net in the consolidated statements of operations. The US$/PKR exchange rates used for the translation of PKR-denominated assets and liabilities are Rs.
Use of Estimates — The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made by management include but are not limited to: (1) impairment of long-lived assets, (2) depreciable lives of assets, (3) allowance for doubtful accounts, (4) fair value of identifiable tangible and intangible assets, including determination of expected useful life and (5) estimating lease terms and incremental borrowing rates. Actual results could significantly differ from those estimates.
Non-controlling Interest — The Company accounts for non-controlling interests in accordance with ASC 810 – Consolidation, presenting them as a separate component of equity in the consolidated balance sheets, with the non-controlling share of net income or loss shown separately in the statements of operations.
Segment Reporting — The Company operates as a single reportable segment in accordance with the FASB’s ASC Topic 280, Segment Reporting. The Company’s chief operating decision maker ("CODM") reviews the business as a whole when evaluating financial performance and allocating resources.
Recent Accounting Pronouncements — From time to time, new accounting pronouncements are issued by the FASB and are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently adopted and recently issued accounting pronouncements will not have a material impact on our consolidated financial position, results of operations and cash flows.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). ASU 2023-06 was issued in response to the SEC’s final amendments in Release No. 33-10532, Disclosure Update and Simplification that updated and simplified disclosure requirements that the SEC believed were duplicative, overlapping, or outdated, and to align the requirements in the FASB Accounting Standards Codification (“Codification”) with the SEC’s disclosure requirements. The effective date for each amendment in ASU 2023-06 will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K by June 30, 2027, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company does not expect the adoption of ASU 2023-06 to have a material impact on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03 "Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)" to improve the disclosures about an entity’s expenses. Upon adoption, we will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard is effective for our 2027 annual period, and our interim periods beginning in 2028, with early adoption permitted. The standard can be applied either prospectively or retrospectively. We are currently assessing its effect on our financial statement disclosures at the time of adoption.
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3. ACQUISITIONS
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| Ferret |
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| WSL |
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Date of acquisition(s) |
| November 30, 2021 |
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| November 30, 2021 |
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Property and equipment |
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Long term loans |
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Long term investments |
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Receivable from associates |
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Trade and other receivables |
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Short term investment |
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Cash and bank balances |
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Total assets |
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Long term loans |
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Loan from directors |
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long term payables |
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| ( | ) |
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| ( | ) |
Short term borrowings |
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| ( | ) |
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| ( | ) |
Accrued interest |
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| ( | ) |
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| ( | ) |
Trade and other payables |
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| ( | ) |
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| ( | ) |
Provision for taxation |
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| ( | ) | |
Total liabilities |
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| ( | ) |
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| ( | ) |
Net assets |
| $ |
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| $ | ( | ) | |
As on November 30, 2021, WHI entered into a
As on November 30, 2021, WHI entered into a
Under the common control method, we recognize the business combination by combining the historical carrying amounts of the assets, liabilities, and equity of the combining entities as of the date of combination. No fair value adjustments are made to the carrying amounts of the combining entities' assets, liabilities, and equity, as the transaction is considered a transfer of ownership interests between entities under common control.
4. CASH AND BANK
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| March 31, 2025 |
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| December 31, 2024 |
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Cash at bank |
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Current accounts |
| $ |
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| $ |
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Savings accounts |
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Cash in hand |
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Pay orders in hand |
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| $ |
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5. RESTRICTED CASH
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| March 31, 2025 |
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| December 31, 2024 |
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Deposit in escrow account |
| $ |
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| $ |
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Margin and other deposits |
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Deposits in escrow account: Represents balance in savings accounts accumulated in Escrow Account. The telecom operators challenged the legality of Access Promotion Contribution (APC) for Universal Service Fund (USF), as levied by Pakistan Telecommunication Authority (“PTA”) in 2009, and the dispute was finally decided by the honorable Supreme Court in December 2015. During pendency of the court proceedings, an International Clearing House (ICH) agreement was signed in 2012, whereby it was decided that regular contributions for APC, based on each operator’s share under the ICH agreement, shall be made by Long Distance and International (“LDI”) operators in an Escrow Account.
The formation of ICH was declared anti-competitive by the Competition Commission of Pakistan, and resultantly PTA issued a policy directive in June 2014 terminating the ICH arrangement. Some operators challenged this termination and obtained interim relief from Sindh High Court and Lahore High Court. However, the Supreme Court adjudicated the matter in February 2015 in favor of termination of ICH, and pursuant upon this, PTA issued its notification of termination of ICH arrangement. As of now, the mechanism of the adjustment of the amount available in the Escrow Account remains to be finalized.
Margin and other deposits include deposits placed with banks against various guarantees. This amount also includes approximately $
6. ACCOUNTS RECEIVABLE – NET
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| March 31, 2025 |
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| December 31, 2024 |
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Considered good – unsecured |
| $ |
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Considered doubtful – unsecured |
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Less: Provision for expected credit loss |
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Provision for expected credit losses has been approximately nil and $
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7. PROPERTY, PLANT AND EQUIPMENT |
| March 31, 2025 |
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| December 31, 2024 |
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Operating fixed assets |
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Capital work-in-progress |
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| $ |
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Operating fixed assets |
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Building on freehold land |
| $ |
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Freehold land |
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Leasehold improvements |
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Plant and equipment |
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Office equipment |
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Vehicles |
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Computers |
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Furniture and fixtures |
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Laboratory and other equipment |
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Less: Accumulated depreciation |
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| $ |
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Useful life of operating fixed assets ranges between
7.1 Details of additions being made for the three months ended March 31, 2025 and the year ended December 31, 2024 are as under:
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| March 31, 2025 |
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| December 31, 2024 |
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Leasehold improvements |
| $ |
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| $ |
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Plant and equipment |
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Office equipment |
| $ |
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| $ |
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Furniture and Fixtures |
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Computers |
| $ |
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| $ |
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7.2 Details of disposals for the three months ended March 31, 2025 and the year ended December 31, 2024 are as follows: | ||||||||
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| March 31, 2025 |
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| December 31, 2024 |
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Plant and equipment |
| $ |
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| $ |
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Computers |
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Total |
| $ |
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| $ |
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8. LEASES
We determine if an arrangement is a lease at inception. We have operating leases for office and temporary living space. Operating leases are included in operating lease ROU assets, current operating lease liability and non-current operating lease liability in our consolidated balance sheets as of March 31, 2025 and December 31, 2024. The Company does not have any finance leases.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rates, which are derived from information available at the lease commencement date, in determining the present value of lease payments. We give consideration to our bank financing arrangements, geographical location and collateralization of assets when calculating our incremental borrowing rates. Our lease terms include options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of less than 12 months are not recorded in the consolidated balance sheets. Our lease agreements do not contain any residual value guarantees. For real estate leases, we account for the lease and non-lease components as a single lease component. Some leases include escalation clauses and termination options that are factored in the determination of the lease payments when appropriate.
If a lease is modified after the effective date, the operating lease ROU asset and liability is re-measured using the current incremental borrowing rate. We review our incremental borrowing rate for our portfolio of leases on a quarterly basis. Lease expense is included in direct operating costs and general and administrative expenses in the consolidated statements of operations based on the nature of the expense.
Break down of operating lease expense:
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| Three Months Ended |
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| March 31, |
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| 2025 |
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| 2024 |
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Operating lease cost |
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Short term lease cost |
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Supplemental balance sheet information related to leases was as follows:
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| March 31, 2025 |
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| December 31, 2024 |
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Operating leases |
|
|
|
|
|
| ||
Operating lease ROU assets, net |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Current operating lease liabilities |
|
|
|
|
|
| ||
Non-Current operating lease liabilities |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
|
|
|
|
|
|
ROU Assets |
|
|
|
|
|
| ||
Lease termination |
|
|
|
|
|
| ( | ) |
Asset lease expense |
|
| ( | ) |
|
| ( | ) |
Foreign exchange loss |
|
| ( | ) |
|
|
| |
ROU Assets – net |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term (in years): |
|
|
|
|
|
|
|
|
Operating leases |
|
|
|
|
|
| ||
Weighted average discount rate: |
|
|
|
|
|
|
|
|
Operating leases |
|
| % |
|
| % | ||
| 19 |
| Table of Contents |
Supplemental cash flow and other information related to leases was as follows:
|
| Three Months Ended |
| |||||
|
| March, 31 |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
| ||
Operating cash flows from operating leases |
| $ |
|
| $ |
| ||
Maturities of lease liabilities are as follows:
Operating leases - Years Ending December 31, |
|
|
| |
2025 (Nine months) |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
Thereafter |
|
|
| |
Total lease payments |
| $ |
| |
Less: imputed interest |
| $ | ( | ) |
Total lease obligations |
| $ |
| |
Less: current obligations |
| $ | ||
Long-term lease obligations |
| $ |
| |
9. INTANGIBLE ASSETS – NET |
|
|
|
| ||||
|
|
|
|
| ||||
|
| March 31, |
|
| December 31, |
| ||
|
| 2025 |
|
| 2024 |
| ||
|
| (Unaudited) |
|
|
| |||
Licenses |
| $ |
|
| $ |
| ||
Patents and copyrights |
|
|
|
|
|
| ||
IRU - media cost |
|
|
|
|
|
| ||
Software |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Less: Accumulated amortization – net |
|
| ( | ) |
|
| ( | ) |
|
| $ |
|
| $ |
| ||
| 20 |
| Table of Contents |
Useful life of intangible assets ranges between
As of March 31, 2025, future amortization expense scheduled to be expensed is as follows:
Year ending December 31, |
|
|
| |
2025 (Nine months) |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
Thereafter |
|
|
| |
|
| $ |
| |
10. TRADE AND OTHER PAYABLES
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
Trade creditors |
| $ |
|
| $ |
| ||
Accrued and other liabilities |
|
|
|
|
|
| ||
Payable to PTA against APC charges |
|
|
|
|
|
| ||
Payable against long term investment |
|
|
|
|
|
| ||
Contract liabilities |
|
|
|
|
|
| ||
Withholding taxes payable |
|
|
|
|
|
| ||
Sales tax payable |
|
|
|
|
|
| ||
Security deposits |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Trade creditors include amounts payable to PTA totaling $
Accrued and other liabilities: This includes payable to key management personnel amounting to $
Security Deposits: These represent security deposits received from customers. These are interest-free and refundable on termination of the relationship with the Company. The relationship of these customers with the Company has ended and these deposits are now payable on demand. These have been utilized by the Company before the promulgation of the Companies Act, 2017.
| 21 |
| Table of Contents |
11. CURRENT PORTION OF NON-CURRENT LIABILITIES
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
Term finance certificates |
| $ |
|
| $ |
| ||
Mark-up payable on TFCs |
|
|
|
|
|
| ||
Long term financing |
|
|
|
|
|
| ||
Lease liabilities |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Details of the current portion of non-current liabilities are provided in their respective notes.
12. ACCRUED INTEREST
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
Short term borrowings |
| $ |
|
| $ |
| ||
Term finance certificates |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
13. SHORT TERM BORROWINGS
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
Repurchase agreement borrowings |
| $ |
|
|
|
| ||
Line of credit facility – others |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Line of credit facility – others:
This represents various interest bearing and interest free loans from different parties.
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
Loan from other parties |
| $ |
|
| $ |
| ||
Loan from AMB Management Consulting (Pvt) Limited |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
| 22 |
| Table of Contents |
Loan from other parties: This represents various interest bearing and interest free loans denominated in US$ from different companies, as mentioned below.
|
| March 30, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
| |||
HTS Tel Communication |
| $ |
|
| $ |
| ||
TLT Communication |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
14. TERM FINANCE CERTIFICATES (TFCs)
|
| March 30, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
Opening balance |
| $ |
|
| $ |
| ||
Repayments |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Current portion |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
| ||
Add: Deferred interest |
|
|
|
|
|
| ||
Exchange adjustment |
|
| ( | ) |
|
| ( | ) |
Closing balance |
| $ |
|
| $ |
| ||
Term finance certificates (TFCs) have a face value of $17.82 per certificate. These TFCs carry a markup at the rate of the six months average Karachi Interbank Offered Rate (KIBOR) plus
IGI Holding Limited (previously IGI Investment Bank Limited) is the Trustee (herein referred to as the Trustee) under the Trust Deed.
The liability of these TFCs was rescheduled in December 2012 and then on April 3, 2015. During the year ended December 31, 2018, a third rescheduling of these TFCs was successfully executed through signing of the Third Supplemental Trust Deed between the Trustees and the Company.
In accordance with the 3rd Supplemental Trust Deed executed during the year 2018, the outstanding principal is repayable by way of quarterly staggered installments with downward revision in markup of
The other main terms included appointment of one representative as a nominee director nominated by the Trustee which has been complied with. Further,
| 23 |
| Table of Contents |
The Company has not paid due quarterly installments of June 2019 to March 2025 amounting to USD $
Due to the non-payment of due installments, the Trustee enforced the Letter of Pledge in 2021, calling
These TFCs are secured against first pari passu charge over the Company's present and future fixed assets including equipment, plant and machinery, fixtures excluding land and building with 25% margin in addition to all rights, benefits, claims and interests procured by the Company under:
| A. | LDI and WLL license issued by PTA to the Company; and |
| B. | Assigned frequency spectrum as per deed of assignment. |
15. LONG TERM FINANCING – SECURED
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
Allied Bank Limited |
|
|
|
| $ |
| ||
Bank Islami Limited |
|
|
|
|
|
| ||
Askari Bank Limited |
|
|
|
|
|
| ||
Standard Chartered Bank Limited |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Allied Bank Limited: This represents the balance transferred as a result of restructuring of short term running finance (RF) facility to Term Loan Facility as subsequently amended on October 8, 2020 and September 30, 2021. Principal will be repaid in 37 stepped up monthly installments starting from August 2021 until August 2024. The markup will be accrued and will be serviced in 12 equal monthly installments, starting from September 2024.
Bank Islami Limited: This represents the balance transferred as a result of restructuring of short-term running finance (RF) facility to Term Loan Facility on February 12, 2021.
Subsequently in June 2023, the Bank approved the Company's restructuring request as a result of which overall repayment tenure was extended by 1 year and 6 months. I.e., the principal repayment will end in November 2025, instead of May 2024 and markup repayment will end in November 2027, instead of May 2026. In the same year, the period for repayment of principal and deferred markup was further extended and according to the revised terms, both will be repaid by November 1, 2027. As of the reporting date the Company is in negotiation with the Bank to fully settle this liability. Following this, the Bank, in November 2024, recovered $0.065 million of principal and $0.040 million of interest through the sale of some pledged listed securities.
| 24 |
| Table of Contents |
Askari Bank Limited: This represents the balance transferred as a result of a settlement agreement from short-term running finance (RF) facility to Term Loan Facility on November 2, 2022. Principal will be repaid in 48 installments starting from November 2022, until October 2026. Markup outstanding after effective discounts / waivers as per the settlement agreement and markup to be accrued, will be serviced in 36 monthly installments, starting from November 2024.
Subsequently in April 2024, the Bank approved the Company's request for restructuring of installments as a result of which total repayment tenure of the facility remains unchanged. Principal settlement tenure was extended by 1 year until October 2027. Further, markup will be paid in the last 2 years (24 installments) starting from November 2025 and ending in October 2027.
The Company used a post tax weighted average borrowing rate for amortization of deferred interests.
Standard Chartered Bank Limited: This represents the balance transferred from short term borrowings as a result of a settlement agreement from short-term running finance (RF) facility to Term Loan Facility on August 9, 2023. Principal will be repaid in stepped up 23 installments starting from August 2023 until June 2025. Interest outstanding after effective discounts / waivers as per the settlement agreement and interest to be accrued, will be serviced in 6 monthly installments, starting from January 2025. |
16. LICENSE FEE PAYABLE
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
License fee payable |
| $ |
|
| $ |
| ||
|
| $ |
|
| $ |
| ||
This represents the balance amount of the license fee payable to the Pakistan Telecommunication Authority (PTA) for WLL licenses. The Company had filed an application with PTA for a grant of moratorium overpayment of balance amount of WLL license. However, PTA rejected the Company's application and demanded its payment. Being aggrieved by this, the Company filed an appeal before Islamabad High Court ("IHC") against PTA's order. Meanwhile, the Ministry of Information Technology ("Ministry") through its letter dated August 30, 2011, allowed the operators, the staggering for settlement of Access Promotion Contribution ("APC") and Initial Spectrum Fee ("ISF") dues and required PTA to submit an installment plan for this purpose after consultations with the operators. In respect of an appeal filed by the Company, IHC took notice of the Ministry's letter and directed PTA through its order dated January 20, 2015, to expeditiously proceed with the preparation and submission of the said installment plan. As of this date, no such installment plan has been submitted by PTA.
PTA has withdrawn the frequencies 3.5 GHz, 479 MHz, 450 MHz, and 1900 MHz PTA in haste and unilaterally has withdrawn 3.5 GHz and 479 MHz frequencies which have already been paid in full until 2024. Through said decision PTA has also withdrawn 1900 MHz frequency spectrum which was already withdrawn by PTA/FAB in 2015 (11th year) until which the spectrum is fully paid on the basis of actual period of usage by the Company. The WLL License provides for such eventuality that when frequency spectrum is withdrawn, the licensee is to be compensated for the balance life of the frequency spectrum, therefore, after withdrawal of spectrum, there is no outstanding amount to be paid related to 1900 MHz frequency spectrum.
| 25 |
| Table of Contents |
As a consequence of above, during last year the outstanding liability for 1900 MHz was reduced to zero on the basis that 1900 MHz frequency had been fully paid for until 2015 (11th year). Similarly, liability for 450 MHz frequency spectrum was reduced pro-rata after withdrawal. Owing to these circumstances, management does not expect the liability to materialize fully in the near future.
17. CONTINGENCIES AND COMMITMENTS
Billing disputes with Pakistan Telecommunication Company Limited (“PTCL”)
GlobalTech Corporation (GTC) and its subsidiaries (collectively, the “Group”) have a
Disputes with Pakistan Telecommunication Authority (“PTA”)
The Group has filed a suit before Civil Court, Lahore, Pakistan on December 15, 2016, in which it has sought a restraining order against PTA in relation to demands of regulatory and other dues and claimed set off from damages / compensation claim of the Group on account of the auction of preoccupied frequency spectrum. The Group has raised a claim of approximately $
During the year 2016, PTA again demanded immediate payment of the principal amount of APC amounting to approximately $
PTA has raised a demand amounting to approximately $
| 26 |
| Table of Contents |
PTA has decided against the Group in the matter relating to the annual radio frequency spectrum fee for the years ended 2011, 2012, 2013, 2014 and 2015 along with late payment charges. The Group has filed appeals against these orders before the honorable Islamabad High Court which are ending adjudication. The management is hopeful that its viewpoint shall be upheld; thus no provision has been incorporated in these financial statements for late payment charges. Moreover, the Company is confident that incidental liability, if any, will be set off by way of a claim filed against PTA. The Group has filed a suit before the High Court of Sindh on July 2, 2011 for declaration, injunction and recovery of approximately $
PTA has raised demand amounting to approximately $
PTA has filed recovery proceedings against the Group before the District Collector / District Officer Revenue, Lahore for an amount of approximately $
PTA has withdrawn the frequencies 3.5 Ghz, 479 Mhz, 450 Mhz and 1900 Mhz. As per management, the ISF for 3.5 Ghz and 479 Mhz is already paid in full through 2024. The outstanding liability for 1900 Mhz is reduced to zero on the basis that 1900 Mhz frequency has been fully paid for until 2015 (actual withdrawal year). Similarly, liability for the 450Mhz frequency spectrum was reduced on a pro rata basis after withdrawal. Corresponding assets have also been retired.
The Group has filed a writ petition with Islamabad High Court against said decision of PTA on similar lines as explained above and the Group’s management and legal advisor feels that there are strong grounds to defend the Group’s stance and that the principal amount and late payment charges determined unilaterally by PTA will not materialize, hence, no provision has been made in these financial statements.
PTA has demanded amounts of annual license fee (ALF) relating to Non-Voice Communication Network Services (NVCNS) through various demand notices. PTA has filed recovery proceedings against the Group before the District Collector / Deputy Commissioner, Lahore for
PTA had demanded an amount of approximately $
PTA has issued show cause notice to the Group with the direction to pay annual regulatory dues for the years ended 2011, 2012, 2013 and 2014, the cumulative amount of approximately $
| 27 |
| Table of Contents |
PTA made a demand amounting to approximately $
Other than the amounts recognized in the financial statements and amounts disclosed in the above contingencies, PTA has also demanded amounts of approximately $
Taxation issues in Pakistan
Separate returns of total income for the Tax Year 2003 were filed by M/s WorldCall Communications Limited, M/s Worldcall Multimedia Limited, M/s Worldcall Broadband Limited and M/s Worldcall Phone Cards Limited, now merged into the Group. Such returns of income were amended by relevant officials under section 122(5A) of the Income Tax Ordinance, 2001 (“Ordinance”) through separate orders. Through such amendment orders, in addition to enhancement in aggregate tax liabilities by an amount of approximately $
Through amendment order passed under section 122(5A) of the Ordinance, the Group’s return of total income for Tax Year 2006 was amended and declared losses were curtailed by an amount of approximately $
In computer balloting for total audit u/s 177 of the Ordinance, the Group was selected for total audit proceedings for the tax year 2009 and the same has been completed with the issuance of order under section 122(1)/122(5) of the Ordinance creating a demand of approximately $
A demand of approximately $
| 28 |
| Table of Contents |
In computer balloting for total audit u/s 177 of the Ordinance, the Group was selected for total audit proceedings for the tax year 2014 and the same has been completed with the issuance of an order under section 122(4) of Income Tax Ordinance, 2001 creating a demand of approximately $
The Commissioner Inland Revenue (“CIR”) has raised demand against the Group for super tax for the tax year 2018, amounting to approximately $
A sales tax demand of approximately $
On September 30, 2016, Punjab Revenue Authority (PRA) issued a show cause notice allegedly demanding USD $
Other matters
One of the Group’s vendors has filed a suit for recovery on July 12, 2018 before the Civil Court, Lahore, Pakistan of certain moneys alleged to have not been paid by the Group under its agreements with the vendor. The principal claim is approximately $
| 29 |
| Table of Contents |
One of the Group’s vendors has filed a petition on November 21, 2014 before LHC. The vendor has a claim of approximately $
One of the Group’s vendors and its allied international identities (referred to as vendors) filed a winding up petition dated
As of March 31, 2025, a total of 36 cases (December 31, 2024: 36) are filed against the Group involving Regulatory, Employees, Landlords and Subscribers having aggregate claim of all cases amounting to approximately $
| 30 |
| Table of Contents |
Notwithstanding the above, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
18. NET REVENUE
|
| Three Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Telecom services |
| $ |
|
| $ |
| ||
Broadband services |
|
|
|
|
|
| ||
Technology and other services |
|
|
|
|
|
| ||
Gross Revenue |
|
|
|
|
|
| ||
Less: Discounts |
|
| ( | ) |
|
| ( | ) |
Less: Sales tax |
|
| ( | ) |
|
| ( | ) |
Total Revenue |
| $ |
|
| $ |
| ||
Introduction
The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers. All revenue is recognized as our performance obligations are satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account under ASC 606.
Most of our current contracts with customers contain a single performance obligation. For contracts where we provide multiple services, such as where we perform multiple ancillary services, each service represents its own performance obligation. The standalone selling prices are based on the contractual price for the service. Our contracts generally include standard commercial payment terms. We have no significant obligations for refunds, warranties or similar obligations and our revenue includes sales taxes collected from our customers.
Disaggregation of Revenue from Contracts with Customers
We derive revenue from seven primary sources: (1) International Termination Services, (2) Indefeasible Right of Use (IRU), (3) Cable TV and Internet Services, (4) Metro Fiber Solutions, (5) Capacity Sale Services, (6) Advertisement Services, and (7) Technology Services.
| 31 |
| Table of Contents |
The following table represents a disaggregation of revenue for the three months ended March 31, 2025 and 2024:
|
| Three Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Telecom Services: |
|
|
|
|
|
| ||
International termination services |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Broadband Services: |
|
|
|
|
|
|
|
|
Cable TV and internet services |
|
|
|
|
|
| ||
Metro fiber solutions |
|
|
|
|
|
| ||
Capacity sale services |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Technology and other services |
| $ |
|
| $ |
| ||
International termination services:
This service represents the international inbound traffic terminated in Pakistan via the Company’s network to local mobile network operators such as Mobilink, Zong, Telenor and Ufone. Revenue from terminating minutes is recognized at the time the call is made over the network of the Company. There is a postpaid billing invoicing cycle for such services. |
Indefeasible Right of Use (IRU) services:
It is a distinct performance obligation whereby the Company enters into a contractual agreement to grant Indefeasible Right of Use (IRU) of dark fiber up to
Cable TV and internet services:
Cable television is a video delivery service provided by the Company to retail and commercial subscribers via a coaxial cable and fiber optics, whereas Internet service is the delivery of data service provided by the Company to the subscribers via a coaxial cable and fiber optics. The Company is providing Fiber to the Home (“FTTH”) services which is not a distinct performance obligation, but rather a component of a connectivity services. The Company charges connection and membership fees at the time of setting up of connections. Subscription revenue from Cable TV, internet over cable, cable connectivity and channels subscription fee is recognized on provision of services. Connection and membership fees are recognized at the time of sale of connection, which is paid by the customer at the time of the sale of the connection, and it entitles the customer to access the cable TV and internet services provided by the Company. The Company follows an advance billing invoicing cycle for such services.
Metro fiber solutions:
This revenue stream represents point to point (P2P) connectivity, the latest Dark Fiber internet technology to its high-end large scale multinational companies, IT companies and leading educational institutions in major cities of Pakistan. Dark Fiber refers to fiber optic networks with no service or traffic running on the fiber strands. Unlike managed fiber services, Dark Fiber gives the maximum level of control to businesses, allowing them to use their preferred protocol and manage and maintain their own equipment. Dark Fiber has the capability to offer near limitless capacity, as well as providing the assurance of dedicated connectivity. It can be termed as a fiber corridor offering Committed information rate (CIR), fiber and data services, making it an excellent choice for organizations who require a dedicated, high capacity, secure service. Revenue from metro fiber solutions is recognized at point in time, when the asset is transferred, and a customer obtains control over it.
| 32 |
| Table of Contents |
Capacity sale services:
These are the services arrangements whereby the Company enters into a contractual agreement to provide a portion of the capacity of fiber, wherein the rights are given to the customers for a longer period, i.e.,
Advertisement services:
This revenue relates to the commercials of the different businesses, which are aired on the Company’s cable TV network. The Company offers advertisement to corporate, SME and retail customers on its in-house entertainment channels. There is vast range of advertising packages tailor-made and customized according to specific client requirements at high economical rates. Clients can opt for multiple modes of advertising like: Multiple Scroll, Multiple Logo, L-Shape, Time-checks, TVC, Documentary and Channel Branding. Advertisement income is recognized based on spots run when commercials are aired on the network. The Company follows a postpaid billing invoicing cycle for such services.
Technology services:
This revenue relates to the sale of technology services. The Company delivered a custom platform for the client. It entailed development of a hybrid solution. Features for service management that were not available in the Hyperledger® framework were developed for this purpose. To optimize operational costs, the Company manages its development and product support operations from Pakistan.
Deferred revenue was $
19. DIRECT OPERATING COSTS
|
| Three Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Interconnect, settlement and other charges |
| $ |
|
| $ |
| ||
Salaries, wages and benefits |
|
|
|
|
|
| ||
Bandwidth and other PTCL charges |
|
|
|
|
|
| ||
Power consumption and rent |
|
|
|
|
|
| ||
Network maintenance and insurance |
|
|
|
|
|
| ||
Pakistan Telecommunication Authority (P TA) fees |
|
|
|
|
|
| ||
Cable license fee |
|
|
|
|
|
| ||
Annual spectrum fee |
|
|
|
|
|
| ||
Store and spares consumed |
|
|
|
|
|
| ||
WMG revenue share cost |
|
|
|
|
|
| ||
Fees and subscriptions |
|
|
|
|
|
| ||
Content cost |
|
|
|
|
|
| ||
Security services |
|
|
|
|
|
| ||
Others |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
| 33 |
| Table of Contents |
20. FINANCE COST
|
| Three Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Unwinding of discount on liabilities |
|
|
|
|
|
| ||
Interest on term finance certificates |
|
|
|
|
|
| ||
Interest on long term loan |
|
|
|
|
|
| ||
Interest on short term borrowings |
|
|
|
|
|
| ||
Finance charges on lease liabilities |
|
|
|
|
|
| ||
Bank charges and commission |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
21. TAXATION
The provision (benefit) for income taxes for the three months ended March 31, 2025 and 2024 consisted of the following:
|
| Three Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Current provision |
|
|
|
|
|
| ||
For the period |
| $ |
|
| $ |
| ||
Prior periods |
|
|
|
|
|
| ||
Total current provision |
|
|
|
|
|
| ||
Deferred provision |
|
|
|
|
|
| ||
Total provision |
| $ |
|
| $ |
| ||
The provision for current taxation represents minimum / final tax under the provisions of the Income Tax Ordinance, 2001 (ITO), as applicable in Pakistan.
|
| Three Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Current provision |
|
|
|
|
|
| ||
Federal |
| $ |
|
|
|
| ||
State |
|
|
|
|
|
| ||
Foreign |
|
|
|
|
|
| ||
Total current provision |
|
|
|
|
|
| ||
Deferred |
| $ |
|
|
|
| ||
State |
|
|
|
|
|
| ||
Foreign |
|
|
|
|
|
| ||
Total provision |
|
|
|
|
|
| ||
| 34 |
| Table of Contents |
Since, the Company does not have taxable income and accounting income for the period ended March 31, 2025 and March 31, 2024, therefore minimum tax on turnover has been levied under the Income Tax Ordinance, 2001, as applicable in Pakistan and details are shown as under:
The components of the Company’s deferred income taxes as of March 31, 2025 and December 31, 2024 are as follows:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
| Unaudited |
|
|
|
| ||
Asset for deferred taxation comprising temporary differences related to: |
|
|
| |||||
Unused tax losses |
| $ |
|
| $ |
| ||
Provision for doubtful debts |
|
|
|
|
|
| ||
Post employment benefits |
|
|
|
|
|
| ||
Provision for stores and spares & stock-in-trade |
|
|
|
|
|
| ||
Provision for credit losses of advances and other receivables |
|
|
|
|
|
| ||
Valuation allowance |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
| ||
Liability for deferred taxation comprising temporary differences on other liabilities |
|
| ( | ) |
|
| ( | ) |
Deferred tax asset |
| $ |
|
| $ |
| ||
Deferred tax asset on tax losses available for carry forward has been recognized to the extent that the realization of related tax benefit is probable from reversal of existing taxable temporary differences and future taxable profit. These unused tax losses mainly represent allowable depreciation expenses for an indefinite period. However, there are no such tax benefits which remain unrecognized into the financial statements and tax related contingencies have been adequately disclosed in note 17 of these financial statements. Management’s assertion of future taxable profit is mainly based on income due to write back of liabilities and business plan to initiate fiber to home services with monetary support from the majority shareholder.
22. RELATED PARTIES
Related parties comprise the parent Company, associated companies / undertakings, directors of the Company and their close relatives and key management personnel of the Company. The Company in the normal course of business, carries out transactions with various related parties. Credit terms with related parties are more than normal business arrangements. Amounts due from and due to related parties are shown under respective notes to these financial statements.
Transactions During the three months ended March 31, 2025 and 2024:
|
| March 31, 2025 |
|
| March 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
|
|
|
|
|
|
| ||
Worldcall Cable (Private) Limited Interest Charged |
| $ |
|
| $ |
| ||
Worldcall Ride Hail (Private) Limited Interest Charged |
| $ |
|
| $ |
| ||
Worldcall Ride Hail (Private) Limited expense born on behalf of associate |
| $ |
|
|
|
| ||
Key management personnel-Advance against expenses disbursed |
| $ |
|
| $ | ( | ) | |
Balances (Due to) Due from Related Parties |
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
| (Unaudited) |
|
|
|
| ||
|
|
|
|
|
|
| ||
Worldcall Cable (Private) Limited (Other receivable) |
| $ |
|
| $ |
| ||
Worldcall Ride Hail (Private) Limited (Other receivable) |
| $ |
|
| $ |
| ||
As on March 31, 2025 and December 31, 2024, outstanding balance from key management personnel was approximately $
The Company owes approximately $
23. SUBSEQUENT EVENTS
On April 7, 2025, the Company entered into a Core Engine Acquisition Agreement with CricksLab L.L.C-FZ (“CricksLab”). Under the terms of the agreement, CricksLab agreed to sell the Company a core engine with full and complete source code and related license. The consideration for the acquisition of the core engine and license was
| 35 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we currently expect. The forward-looking statements contained herein should not be relied upon as representing our assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
All dollar amounts provided herein which are designated by a “$” are reported in U.S. dollars.
The following is a discussion of our consolidated financial condition and results of operations for the three months ended March 31, 2025 and 2024, and other factors that are expected to affect our prospective financial condition. The following discussion and analysis should be read together with our Condensed Consolidated Financial Statements and related notes of this Quarterly Report on Form 10-Q above and our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 27, 2025. Some of the statements set forth in this section are forward-looking statements relating to our future results of operations. Our actual results may vary from the results anticipated by these statements. Please see “Cautionary Note Regarding Forward-Looking Statements” above.
Certain capitalized terms used below but not otherwise defined, are defined in, and shall be read along with the meanings given to such terms in, the notes to the unaudited financial statements of the Company for the three months ended March 31, 2025, above.
In addition, unless the context otherwise requires and for the purposes of this Report only:
| · | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; |
| · | “SEC” or the “Commission” refers to the United States Securities and Exchange Commission; |
| · | “Securities Act” refers to the Securities Act of 1933, as amended. |
Available Information
The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the SEC. The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge at our website (www.globaltechcorporation.com) under “Investor” – “SEC Filings”, when such reports are available on the SEC’s website. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The Company periodically provides other information for investors on its corporate website, www.globaltechcorporation.com. This includes press releases and other information about financial performance, information on corporate governance and details related to the Company’s annual meeting of shareholders. The information contained on the websites referenced in this Form 10-Q is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.
Overview
We are a technology holding company. As a technology holding company, we have infrastructure assets that form the backbone of our Telecom, Cable TV and Broadband service offering. The Company is also engaged in development of software products and solutions that are offered as standalone service offering to clients.
We are engaged in Telecom, Media and Broadband operations through our subsidiary in Pakistan. We are a leading cable and broadband operator in Pakistan and a prominent broadband communication services company providing video and broadband internet services in major cities of Pakistan through Hybrid Fiber Coaxial (HFC) and state-of-the-art fiber optic networks. We also provide fiber optic network connectivity services to corporations including telecom operators. For corporate and consumers’ segments, we also provide Fiber to the Home (FTTH) connectivity for broadband and cable TV services. We also offer international voice/data interconnect services with a principal focus on the termination of international voice traffic into Pakistan.
| 36 |
| Table of Contents |
Under our technology development initiative, we have also developed and matured software products and services, targeting emergent opportunities in AI & Big data.
AI & Big data
Artificial Intelligence (AI) maturity as a technology and its availability at reasonable pricing is impacting the conduct of business across a wide spectrum of industries. Artificial Intelligence with its ability to deliver actionable insight on a specific data-set impacts the Company’s decision-making processes and it further streamlines workflows for cost, time and operational efficiency. We believe this presents an opportunity to target existing market applications and requirements that can be better serviced by using new tools available for solutions development and delivery in the AI domain. In big data applications, data ingestion, curation and analysis, powered by technology stack available under AI, is being facilitated by enhanced processing power and development of customized algorithms for specific requirements. Cloud and hosting infrastructure is also maturing at pace with industry requirements.
Our core focus for software development is on regulatory compliance assurance (including risk mitigation solutions), integrated e-commerce with ERP offerings and big data platforms. We believe our focus areas for software development have robust market credentials in terms of existing market and good future growth potential down the line. We believe that a major part of our existing market in these target segments will need to migrate to better, faster and more cost-efficient offerings developed using the latest technology stack. We believe that our focus areas represent significant opportunity as a major portion of the current market is serviced by technology products that are not AI ready or enabled and would need significant development to transform into a more competitive product.
The Company also operates a Center of Excellence (CoE) for AI & Big Data services to support our software solutions development and sales. It includes a wide reaching industry engagement initiative to enable co-creation and collaborative software developments. A curated portfolio of significant products is showcased on our website and certain significant products are also marketed through their own dedicated branding with independent web and social media presence.
Telecom, Broadband and Cable TV Operations
Long Distance and International Operations
The Company maintains a robust infrastructure and international interconnect portfolio for its international traffic operations. The operations target voice traffic coming to Pakistan principally originating from the overseas Pakistani population calling home and not any significant business / corporate originations. Traditional traffic origination points are Middle Eastern countries, the United Kingdom, and North America. Termination of voice traffic is highly regulated in Pakistan and the Company has been in operation since 2004 in this segment of operations.
International voice termination into Pakistan is a major revenue stream for the Company and it increased by $0.17 million for the three months ended March 31, 2025, compared to March 31 2024. The increase in volume of traffic facilitated by additional capacity offering to our middle east client contributed to this revenue growth.
Broadband and Cable Operations
The Company has nearly 1,900 kilometers (1,180 miles) of fiber optic infrastructure deployed across 20 major cities of Pakistan with a potential ability to access a market of almost 3 million households for subscriber acquisition. We believe that this is a major asset moving forward as access to subscriber concentration points is essential for our future strategy. Our focus areas remain on upgrade of our existing HFC subscriber base to FTTH which has continued for this year.
Broadband customers increased as of March 31, 2025, compared to December 31, 2024, through our offering of more affordable broadband only service on FTTH and additional broadband revenues of $0.46 million were recorded in March 31, 2025. It is expected that growth in subscribers will continue with additional investments in subscriber acquisitions. Additionally, we migrated part of our subscriber base on Hybrid Fiber Coaxial (HFC) network to a more robust Fiber to the Home (FTTH) offering.
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| Table of Contents |
Video revenue decreased in the three months ended March 31, 2025, compared to 2024, primarily due to a decline in the number of residential video customers, partially offset by an increase in average rates. We expect that the number of residential video customers will continue to decline as viewers are using streaming services and dropping cable television bundled services. We expect this trend to continue.
Technology Services and Products
Our revenues for software development and solution sales increased during the year. The Company delivered software based on Hyperledger® platform for a UK based client. The Company delivered a custom platform for the client. It entailed development of a hybrid solution that enabled the Hyperledger based platform to deliver permissioned connectivity with automated KYC integration. Features for service management that were not available in the Hyperledger® framework were developed for this purpose. The segment is observing additional revenues so additional growth is expected as more products are maturing into commercial offerings and additional sales are being targeted in this segment of operations. The Company has also upgraded its internal software for commercial offering across various segments. Billcare (www.billcare.io) has been developed, focusing on subscriber billing for the cable industry and is being launched in the US market.
Moving forward we expect revenue contributions from technology operations and services to increase significantly.
The Company has the following significant products and services in its technology offerings:
Digital Lending Platform
CADNZ is a unique AI – Enabled Digital Lending Platform that seeks to deliver frictionless operational excellence. The platform incorporates the latest technology framework. For AI enablement, the Company developed a robust data-management solution including data-warehousing, a customized ETL (Extract, Transform and Load) engine that can handle a wide set of data integration requirements and seamless connectivity scheme that can facilitate integration of third-party applications as per client requirements. A reporting engine delivers actionable insights along with trigger automations that can identify and highlight areas of intervention independently. Data structure has also been enabled for future AI integration for specific client requirements. We believe that CADNZ is an ideal solution for small to medium sized banks and credit unions. It replaces multiple fragmented system deployments by integrating all functionalities into a single AI – driven hub. CADNZ automates workflows, empowering banking staff to focus on customer engagements and business growth delivering seamless interactions for both clients and customers. CADNZ is specifically developed for the US banking sector and we believe that this has huge potential. In the future, the Company plans to offer this product in Europe, the UK and the Middle East. We believe that this project has potential to generate significant revenues for the Company moving forward.
Compliance Assurance and Risk Mitigation
Under the auspices of the Company’s AI & Big Data Center of Excellence (CoE) initiative, the Company has worked to strengthen the collaborative development of products that make use of the latest technology stacks targeting compliance delivery and risk mitigation for various applications in law enforcement and the financial sector. Three products have been curated for global operations. These are cocreation initiatives where Go-to-Market and sales in respective territories are the responsibility of the Company.
EntityScan is focused on individual and corporate listings for usage by banks and law enforcement agencies for intelligent sanction and criminal screening for compliance and risk management. The core database is connected to a significant number of sources and is updated in near to real-time for its data points by reviewing daily updates as released by respective entities. ETL processing for uniformity is ensured and query results are further curated for accuracy and relevance. AI is deployed for curation of data (exact and fuzzy match) and processing of distorted images.
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| Table of Contents |
EDFI-AI (Enhanced Digital Financial Information powered by AI is focused on predictive and pre-emptive transaction analysis that can be deployed in any transactional space for identification of suspicious and fraudulent activities. A proprietary framework ETL, processes and populates a database with historic data, curates the relationship schematics into a graphical representation of transactions collapsed for simplicity and ready analysis. Once the system is deployed, transactions can be monitored on multiple data points in parallel to isolate any anomalous behavior that may require intervention to ensure compliance. EDFI-AI as a product is primarily structured for banks. AI is deployed for a network analysis engine and use of graph database.
HyperLocal PEP Scan is focused on identifying and classifying Politically Exposed Persons for financial institutions. The HyperLocal PEP listing is further augmented by review of local data to deliver a hyperlocal Politically Exposed Persons (PEP) tool. Local data ingestion is further augmented by AI enabled search tools used in facial recognition and RCA (Relatives and Close Associates) development. PEP handling by financial institutions is highly regulated and sensitive and our HyperLocal PEP Scan delivers a robust solution which is much faster to deploy with a much higher degree of accuracy than competitors’ products.
The portfolio of projects is ready for commercial sale and is being marketed for global deployment in US and international markets.
ERP with e-commerce integration
Our Thrivo.AI platform is being developed by the Company to integrate retail centric ERP with AI enabled e-commerce offerings. We believe that current e-commerce offerings provide limited data insight to business owners related to actual decision matrices that can translate into sales on their storefront. The Company is developing an e-commerce platform offering that would capture additional data points related to sales maturity and deliver actionable insight to business owners for improved sales conversion. AI tools are being used for creating the data-management solution and BI dashboard development. We believe that it offers unique competitive advantages for small to midsized retail operations that require additional actionable insights in the changing landscape of business operations. Thrivo.AI directly contributes towards enhanced efficiency, agility and business resilience of its clients. Thrivo.AI is being packaged in a modular architecture to ensure a smooth on-boarding of clients in the least cumbersome manner with additional cost efficiency as it delivers all-in-one integration. It is targeted to replace disparate offerings that functionally deliver ERP, retail management and e-commerce in standalone architecture.
Summary Table for Services offered
S.No. |
| Service |
| Service Area |
| End-Consumer |
1 |
| Long Distance and International (LDI) |
| National |
|
|
1a |
| Bulk Sales |
|
|
| Telecom Operators |
1b |
| Call termination charged per minute |
|
|
| Telecom Operators |
2 |
| Broadband |
|
|
|
|
2a |
| Fiber to the Home (FTTH) |
| Lahore |
| Corporate/Residential |
2b |
| Hybrid Fiber Coaxial (HFC) |
| Lahore / Karachi / Islamabad |
| Residential |
2c |
| Affordable Broadband |
| Lahore / Karachi / Islamabad |
| Resellers/Residential |
2d |
| Fiber Optic connectivity |
|
|
| Telecom Operators/ Corporate |
3 |
| Cable TV |
|
|
|
|
3a |
| Analog and Digital Service (FTTH) |
| Lahore |
| Corporate/Residential |
3b |
| Analog and Digital Service (HFC) |
| Lahore / Karachi / Islamabad |
| Residential |
3c |
| Analog and Digital Service (Fiber Optic) |
| Lahore / Karachi / Islamabad / Multan / Faisalabad |
| *Local Cable Operator/ Local Loop Operator |
4 |
| Technology Services |
| International |
| Non-Residential |
4a |
| Backing software |
| International |
| Non-Residential |
*We provide Analog and Digital services via our Fiber Optic network to local cable operators, wherein each of the local operators reduces capital costs by receiving our service rather than installing equipment for receiving programming directly from Networks.
| 39 |
| Table of Contents |
Pricing information for the listed services is as follows.
Service 1a is charged at bulk monthly rates with unlimited volumes of traffic. The origination operator is able to generate additional volumes by offering discounted calling rates for Pakistan and local Pakistani operators connected to the Company’s LDI networks which benefits from additional income by utilization of vacant capacity on the interconnect. The Company’s margin is fixed irrespective of the volume of traffic.
Service 1b is charged on per minute of traffic (on per second incremental basis) to the originating party along with a corresponding termination rate charged by the terminating party connected to the Company’s LDI network.
Services 2a and 3a are direct fiber connectivity to the end user through Fiber to the Home (FTTH) architecture. Service is charged as per subscription opted by the end user, and includes cable TV and broadband data. Cable TV offerings further includes the option for analogue, digital or both services.
Services 2b and 3b are direct hybrid fiber coaxial (HFC) connectivity to the end user. Service is charged as per subscription opted by the end user and includes cable TV and broadband data. Cable TV offerings further include options to have analogue, digital or both services. Compared to FTTH, HFC offers a lower capacity broadband connectivity for the end-user.
Service 2c is connecting local resellers to the Company’s backbone where service offerings and packaging is done by the Company and local loop operators only manage subscriber services for connectivity and network maintenance. The Company charges individual packages on a pre-paid top-up basis.
Service 2d provides backhaul and core network connectivity for telecom operators along with P2P links for corporate data connectivity. Telecom operator’s charges are on a long-term lease basis with O&M charged on an annual basis for a specific length of fiber optic network deployment. For corporate clients, this includes one-time charges for network deployment with monthly O&M.
Service 3c connects and provides local cable operators and local loop operators with the Company’s Cable TV services (Analogue and Digital). The connection is made on fiber optic cable to end-user premises and further distribution is handled by local loop operators through their own resources.
Service 1 is monitored for volume of traffic and applicable rates. Services 2a, 2b, 2c, 3a and 3b are monitored on subscriber connected basis. Services 2d and 3c are monitored for new sales and a Service Level Agreement (SLA) is delivered for existing customers.
Service 4a, for our software development services, the Company charges on a delivery basis with prices for services and products, as per negotiated contract terms with clients.
Service 4b, for software products, the charges are on an annual and /or monthly subscription basis along with options for charging on a per query and /or usage basis.
Results of Operations
Net Revenue: Revenue is derived from telecom services and broadband services. Telecom services-related revenue stood at $3.65 million for the three months ended March 31, 2025, compared to $3.47 million for the three months ended March 31, 2024. This increase of approximately $0.17 million was primarily due to an increase in the traffic volume of our international termination business. Broadband services generated revenue of $0.69 million for the three months ended March 31, 2025, compared to $0.23 million for the three months ended March 31, 2024. The increase of $0.46 million is mainly due to internet service sales in the three month ended March 31, 2025.
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| Table of Contents |
Non-GAAP loss from operations (operating loss minus other income) (a non-Generally Accepted Accounting Principles (GAAP) financial measure, see “Non-GAAP Financial Measures”, below) for the three months ended March 31, 2025 was $0.72 million, and non-GAAP loss from operations for the three months ended March 31, 2024 was $0.88 million. Adjusted EBITDA (a non-Generally Accepted Accounting Principles (GAAP) financial measure, see “Non-GAAP Financial Measures”, below) for the three months ended March 31, 2025 is $(0.09) million, whereas Adjusted EBITDA for the three months ended March 31, 2024 is $(0.35) million.
Non-GAAP Financial Measures
We have included non-GAAP loss from operations and Adjusted EBITDA in this Report as a supplement to Generally Accepted Accounting Principles (GAAP) measures of performance to provide investors with an additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated are useful in assessing the Company and its results of operations. Non-GAAP loss from operations and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. Adjusted EBITDA is also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Non-GAAP loss from operations and Adjusted EBITDA have limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: Adjusted EBITDA does not reflect cash expenditures, future requirements for capital expenditures, or contractual commitments; Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; and Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments. For example, although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements. We believe non-GAAP loss from operations provides our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as this metric includes the effect of other income. Additionally, other companies in our industry may calculate non-GAAP operating loss and Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure. You should not consider non-GAAP operating loss and Adjusted EBITDA in isolation, or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure.
We realized revenue, Adjusted EBITDA and non-GAAP loss from operations during the periods presented as follows:
|
| Three months ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Net revenues |
| $ | 4,341,720 |
|
| $ | 3,702,258 |
|
Adjusted EBITDA |
| $ | (86,494 | ) |
| $ | (354,352 | ) |
Non-GAAP loss from operations |
| $ | (724,733 | ) |
| $ | (882,422 | ) |
| 41 |
| Table of Contents |
Set forth below is a presentation and reconciliation of our non-GAAP loss from operations and Adjusted EBITDA for the three months ended March 31, 2025 and 2024:
|
| Three months ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
|
|
|
|
|
|
| ||
Loss from operations |
| $ | (943,672 | ) |
| $ | (1,148,073 | ) |
Plus other income |
|
| 218,938 |
|
|
| 265,651 |
|
Non-GAAP loss from operations |
|
| (724,733 | ) |
|
| (882,422 | ) |
|
| Three months ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
|
|
|
|
|
|
| ||
Net revenue |
| $ | 4,341,720 |
|
| $ | 3,702,258 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
|
| (1,125,204 | ) |
|
| (1,421,158 | ) |
Add back (subtract) |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 501,098 |
|
|
| 778,368 |
|
Finance cost |
|
| 346,737 |
|
|
| 493,290 |
|
Taxation |
|
| 53,733 |
|
|
| 45,446 |
|
Exchange loss |
|
| 137,142 |
|
|
| (250,298 | ) |
Adjusted EBITDA |
| $ | (86,494 | ) |
| $ | (354,352 | ) |
Non-GAAP operating loss is defined as GAAP operating loss plus other income.
Adjusted EBITDA is defined as net income attributable to GlobalTech Corporation shareholders plus net income attributable to non-controlling interest, net interest expense, income taxes, depreciation and amortization, and other operating (income) expenses, net, such as exchange loss/(gain).
Adjusted EBITDA during the three months ended March 31, 2025 was mainly impacted by the increase in international termination business, broadband services, technology services provided during the period, exchange loss and reduction in policy rate, whereas loss from operations during the three months ended March 31, 2024 was impacted mainly by exchange gain.
During this period, Company was also transforming its business operations and moving towards a service-centric operation that does not require heavy investments in infrastructure. Current business operations are being maintained at the optimal operating level and new investments were principally utilized for solutions development more suited for future needs. The Company is focused on the development of products and services that would be better suited for its future roadmap as a technology-centric solutions Company.
Gross Margin: The Company recorded a gross margin (net revenue minus direct operating costs) of US $0.41 million during the three months ended March 31, 2025, compared to US$ 0.12 million during the three months ended March 31, 2024. LDI revenue increased due to an increase in traffic. Broadband revenue increased due to an increase in connections.
Direct operating costs: Direct operating costs stood at USD $3.93 million during the three months ended March 31, 2025 compared to USD $3.58 million during the three months ended March 31, 2024. The increase in direct costs is mainly due to interconnect costs, which are aligned with termination revenue.
Other operating costs: Other operating costs stood at USD $0.64 million during the three months ended March 31, 2025, compared to USD $0.49 million during the three months ended March 31, 2024. The increase in operating costs is mainly due to legal and professional charges.
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| Table of Contents |
Depreciation and amortization: Depreciation and amortization was USD $0.5 million for the three months ended March 31, 2025, compared to USD $0.8 million for the three months ended March 31, 2024, which decrease was mainly due to maturity of one of the intangible assets.
Other income and expenses: The Company recorded other income of USD $0.22 million during the three months ended March 31, 2025 compared to USD $0.27 million during the three months ended March 31, 2024. Other expenses stood at USD $0.21 million during the three months ended March 31, 2025 against USD $0.004 million during the three months ended March 31, 2024, which was mainly due to currency devaluation.
Updates on business plans:
Long Distance and International traffic operations:
The Company has maintained its market positioning and business strength in Long Distance and International voice operations. Traffic volumes and revenues delivered quantitative growth during the first quarter. The Company plans to maintain its operations with focus on voice termination into Pakistan as its primary service continuing in 2025.
Broadband and Cable TV Operations:
The Company plans to continue with an expansion of its affordable broadband only connectivity services on FTTH along with upgrades of its existing HFC subscribers to FTTH connectivity.
Software Solutions and Technology Products:
The Company has developed an impressive portfolio of technology products for its global offerings. The Company has also established a robust eco-system within the organization for managing sales and product support services for its products. Moving forward, the Company plans to focus on products that have significant and established market size with expected good growth potential.
We believe that there is an opportunity to offer better products based on new technological innovations in the AI & Big Data space that can replace previous generations of products that define the bulk of our existing markets. We plan to work to maximize market penetration of our offerings during this window of opportunities as clients migrate / upgrade to latest offerings, letting go of traditional software solutions based on older technology stacks.
Company CRM and related software and IT tools for operations have been further upgraded to form a commercial product BillCare (www.billcare.io) and a sales platform has been established for the same.
Market engagement with demos, discovery workshops and walkthroughs have been arranged for our partners and clients. These engagements have been very productive, but we expect that the full extent of the commercial potential will only become evident with time and progress achieved in sales.
Liquidity and Capital Resources
We have significant amounts of debt. The principal amount of our debt as of March 31, 2025, was $6.87 million, consisting of $4.23 million of Term Finance Certificates (TFC), and long-term and short-term borrowings of $2.64 million. These debt facilities are secured and require significant cash to fund principal and interest payments. We are required to make debt repayments of US$5.94 million in the coming twelve months and we believe that sufficient funds will be generated through our operations to pay such amounts; however, we may need to raise funding in the future. The receptiveness of the capital markets to an offering of debt or equities cannot be assured and may be negatively impacted by, among other things, debt maturities, current market conditions, and potential stockholder dilution. The sale of additional securities, if undertaken by us and if accomplished, may result in significant dilution to our shareholders. However, such future financing may not be available in amounts or on terms acceptable to us, or at all.
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Notwithstanding the above, the Company has taken certain steps to address its liquidity and capital requirements:
A settlement offer has been made to the Term Finance Certificates (TFC) holders in Pakistan against an equity swap for the Company’s common stock. The same is under review by the TFC holders. If accepted by the TFC holders, this would address a major portion of our debt and also reflect positively on our financial performance on account of reduced interest costs. However, the probability of success cannot be gauged at the moment as it involves approval from the TFC holders and then execution of the transaction in a compliant manner, therefore, regulatory compliance is being assessed. This offer is at an early stage and the TFC holders may not accept our offer or there may be other compliance issues that may affect the execution of this offer. The issuance of shares of common stock to the TFC holders may cause dilution to existing shareholders.
Moving into the second, third and fourth quarters of 2025, the Company may seek to raise equity funding through private or public offerings, including as part of its goal to uplist its common stock on the Nasdaq Capital Market, of which there can be no assurance; however, the timing and outcome of such efforts cannot be assured. Any sale of equity will cause dilution, which may be significant, to existing stockholders.
While there is no guarantee that we will raise sufficient funds to meet our capital needs or that even if available it will be on terms acceptable to us, we will be very cautious and prudent about any new capital raise given the global market uncertainties. However, we are very conscious of the dilutive effect and price pressures in raising equity-based capital.
Despite the challenging environment, we are continually expanding our FTTH network using our existing equipment inventory consisting of Fiber Optic Cable and Customer Premises Equipment without having to deploy additional capital to purchase such equipment. We anticipate that the continual deployment will result in additional revenues for the Company.
We actively review possible acquisitions and mergers against our objectives including, among other considerations, improving operational efficiency, achieving synergies, improving product development or technical capabilities of our business, and achieving appropriate return targets, and we may participate in such acquisitions, to the extent we believe these possibilities present attractive opportunities, and funding permitting. Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing and amount of our expenditures with the main focus on growth in international termination traffic, FTTH rollout, Data, and Fiber sales, software product and service and our ability to convert the same into increases in bottom line cash flows.
The Company believes its cash and cash equivalents, which totaled $2,990,606 as of March 31, 2025, along with cash generated by ongoing operations and continued access to debt/capital markets, will be sufficient to satisfy its cash requirements over the next 12 months and beyond. However, this includes restricted cash of $2,699,712 that is not available for immediate ordinary business use. We believe that our existing staffing levels are sufficient to service additional customers.
Additional information regarding our outstanding debt and payables obligations are described in greater detail under “Part I” - “Item 1. Financial Statements” in the Notes to Condensed Consolidated Financial Statements under Notes: 10 (Trade and Other Payables), 11 (Current Portion of Non-Current Liabilities), 13 (Short Term Borrowings), 14 (Term Finance Certificates (TFCS)), 15 (Long Term Financing – Secured), and 16 (License Fee Payable).
Cash flows from operating, investing, and financing Activities:
Cash and Cash Equivalents: We held $2,990,606 and $3,455,270 cash and cash equivalents as of March 31, 2025, and December 31, 2024, respectively, which includes restricted cash of $2,699,712 and $2,633,019 that is not available for immediate ordinary business.
Operating Activities: Net cash used in operating activities for the three months ended March 31, 2025 was $0.97 million compared to net cash generated from operating activities of $1.41 million for the three months ended March 31, 2024. The decrease is mainly due to the cash inflow from long term loans and other assets in the comparative period of last year.
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Investing Activities: Net cash used in investing activities for the three months ended March 31, 2025, and 2024 was $0.02 million and $0.04 million, respectively. The decrease in cash used in investing activities was primarily due to a decrease in proceeds from the sale of property and equipment in the current period, compared to the prior one.
Financing Activities: Net cash used in financing activities decreased $0.03 million, to $.05 million during the three months ended March 31, 2025, compared to $.08 million during the three months ended March 31, 2024. The reason for the decrease was primarily the result of a decrease in repayment of long term-financing, offset by a repayment of a related party loan.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 2. BASIS OF PREPARATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, in the notes to consolidated financial statements included above under “Part I” - “Item 1. Financial Statements”.
We prepare our consolidated financial statements in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expense, and related disclosures. We base our estimates, assumptions, and judgments on historical experience, current trends, and various other factors that we believe to be reasonable under the circumstances. The accounting estimates used in the preparation of our consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as our operating environment changes. On a regular basis, we review our accounting policies, estimates, assumptions, and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results of operations.
Critical accounting policies are those policies used in the preparation of our consolidated financial statements that require management to make difficult, subjective, or complex adjustments, and to make estimates about the effect of matters that are inherently uncertain.
There have been no material changes in our critical accounting policies and estimates from those described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 27, 2025.
Business Combinations:
The Company accounts for business combinations under the provisions of Accounting Standards Codification (ASC) 805, Business Combinations, which requires business combinations under the common control method. Under the common control method, we recognize the business combination by combining the historical carrying amounts of the assets, liabilities, and equity of the combining entities as of the date of combination. The financial statements reflect the assumption that the combining entities have been operating as a single economic entity throughout the period of common control. No fair value adjustments are made to the carrying amounts of the combining entities’ assets, liabilities, and equity, as the transaction is considered a transfer of ownership interests between entities under common control. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred.
Off-Balance Sheet Arrangements
As of March 31, 2025, and 2024, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special-purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
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Contractual Obligations and Commitments
We have contractual obligations under our financing arrangements. We also maintain operating leases for office premises. We were in compliance with all debt covenants as of March 31, 2025 and December 31, 2024.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by 17 C.F.R. 229.10(f)(1) and are not required to provide information under this item, pursuant to Item 305(e) of Regulation S- K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established and maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosures.
Management, with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. As of March 31, 2025, based on the evaluation of these disclosure controls and procedures, and in light of the material weakness we found in our internal controls over financial reporting as of December 31, 2024 (as described in greater detail in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 27, 2025), our CEO and CFO have concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.
Inherent Limitations over Internal Controls
Management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the three months ended March 31, 2025 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
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Part II. Other Information
Item 1. Legal Proceedings
From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.
Such current litigation or other legal proceedings are described in, and incorporated by reference in, this “Item 1. Legal Proceedings” of this Form 10-Q from, “Part I” - “Item 1. Financial Statements” in the Notes to Consolidated Financial Statements in “Note 17, Commitments and Contingencies”. The Company believes that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our financial condition or results of operations. However, assessment of the current litigation or other legal claims could change in light of the discovery of facts not presently known to the Company or by judges, juries or other finders of fact, which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.
Additionally, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I—Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 27, 2025, which could materially affect our business, financial condition and/or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, cash flows and/or future results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
There have been no sales of unregistered securities during the quarter ended March 31, 2025, and from the period from April 1, 2025, to the filing date of this Report, which have not previously been disclosed in a Current Report on Form 8-K.
Use of Proceeds from Sale of Registered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliate Purchasers
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans. Our directors and executive officers may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended March 31, 2025, none of the Company’s directors or officers (as defined in Rule 16a-1(f))
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Item 6. Exhibits
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101.CAL |
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101.LAB |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase |
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| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
*The certifications on Exhibit 32 hereto are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that Section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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| GLOBALTECH CORPORATION |
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Dated: May 7, 2025 | By: | /s/ Dana Green |
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| Dana Green |
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| Chief Executive Officer, President and Director |
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| (Principal Executive Officer) |
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Dated: May 7, 2025 |
| /s/ Muhammad Azhar Saeed, FCA |
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| Muhammad Azhar Saeed, FCA |
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| Chief Financial Officer (Principal Financial/Accounting Officer) |
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