10-Q 1 globalarena10q1q15v6.htm FORM 10-Q Global Arena Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


[x]     Quarterly Report Pursuant to Section 13 or 15(d) Securities Exchange Act of 1934 for Quarterly Period Ended March 31, 2015

-OR-

[ ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________ to________


Commission File Number  000-49819


Global Arena Holding, Inc.

 (Exact name of registrant as specified in its charter)


 

 

 

Delaware

 

33-0931599

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)


1500 Broadway, Suite 505

New York, NY

 

10036

(Address of principal executive offices)

 

(Zip Code)


(212) 508-4700

 (Registrant's telephone number, including area code)


Indicate by check mark whether the issuer (1) 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.  Yes  [x]   No [ ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes [x]   No [ ]




1



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerate filer, or a small reporting company as defined by Rule 12b-2 of the Exchange Act):


Large accelerated filer        [  ]

 

Non-accelerated filer             [  ]

Accelerated filer                 [  ]

 

Smaller reporting company   [x]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  [ ]      No [x]


The number of outstanding shares of the registrant's common stock,

June 1, 2015:  Common Stock  -  24,136,693




2



GLOBAL ARENA HOLDING, INC.

FORM 10-Q

For the three months ended March 31, 2015

INDEX


PART 1 – FINANCIAL INFORMATION

 

 

 

 

 

Page

Item 1.  Financial Statements (Unaudited)

 

5

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

 

32

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

 

39

Item 4.  Controls and Procedures

 

39


PART II – OTHER INFORMATION



 

 

 

Item 1.  Legal Proceedings

 

41

Item 1A.  Risk Factors

 

42

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

42

Item 3.  Defaults upon Senior Securities

 

42

Item 4.  Mine Safety Disclosures

 

42

Item 5.  Other Information

 

43

Item 6.  Exhibits

 

43

 

 

 

SIGNATURES

 

44





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PART I – FINANCIAL INFORMATION

 

This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934.  These statements are based on management’s beliefs and assumptions, and on information currently available to management.  Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used.

 

Forward-looking statements are not guarantees of future performance.  They involve risks, uncertainties, and assumptions.  Our future results and shareholder values may differ materially from those expressed in these forward-looking statements.  Readers are cautioned not to put undue reliance on any forward-looking statements.





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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


ASSETS

March 31, 2015

 

December 31, 2014

 

(Unaudited)

 

 

 

 

 

 

Current assets

 

 

 

  Cash

$      80,159

 

$     54,977

  Prepaid expenses

95,061

 

10,000

 

 

 

 

    Total current assets

175,220

 

74,221

 

 

 

 

Other assets

 

 

 

  Goodwill

33,900

 

33,900

  Security deposit

19,700

 

19,700

  Receivable from related party

17,163

 

24,463

  Other assets

23,752

 

28,702

 

 

 

 

    Total other assets

94,515

 

97,521

 

 

 

 

TOTAL ASSETS

$    269,735

 

$   171,742


Continued on next page



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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Continued from previous page


LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)

March 31, 2015

 

December 31, 2014

 

(Unaudited)

 

 

 

 

 

 

Current liabilities

 

 

 

  Cash overdraft

$          32,244

$

-

  Accounts payable and accrued expenses

1,021,210

 

867,981

  Convertible promissory notes payable,

 

 

 

    net of debt discount of $274,126 and $290,717

 

 

 

    at March  31, 2015 and December 31, 2014, respectively

1,237,816

 

858,225

  Promissory notes payable

230,000

 

230,000

  Deferred revenue

91,100

 

-

  Derivative liability

817,700

 

431,400

 

 

 

 

    Total current liabilities

3,430,070

 

2,387,606

 

 

 

 

Convertible promissory notes payable,

 

 

 

  net of debt discount of $360,256 and $386,900

 

 

 

  at March 31, 2015 and December 31, 2014, respectively

139,744

 

113,100

 

 

 

 

    Total liabilities

3,569,814

 

2,500,706

 

 

 

 

Stockholders’ (deficiency)

 

 

 

  Preferred stock, $0.001 par value; 2,000,000 authorized;

 

 

 

    none issued and outstanding shares

-

 

-

  Common stock, $0.001 par value; 100,000,000 shares

24,851

 

24,851

    authorized;  24,850,979 shares issued at March 31,

 

    2015 and December 31, 2014; 24,136,693 shares outstanding

 

    at March 31, 2015 and December 31, 2014

 

  Additional paid-in capital

10,983,799

 

10,834,699

  Accumulated (deficit)

(13,812,405)

 

(12,689,981)

 

 

 

 

 

(2,803,755)

 

(1,830,431)

  Less: treasury stock, 714,286 shares at cost

(250,000)

 

(250,000)

 

 

 

 

  Stockholders’ (deficiency) attributable to common stockholders

(3,053,755)

 

(2,080,431)

  Noncontrolling interests

(246,324)

 

(248,533)

 

 

 

 

    Total stockholders’ (deficiency)

(3,300,079)

 

(2,328,964)

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIENCY)

$        269,735

$

171,742


See notes to consolidated financial statements.



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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

(UNAUDITED)

 

2015

 

2014

Revenues:

 

 

 

  Commissions

$         10,655

 

$        14,217

 

 

 

 

Operating expenses

 

 

 

  Salaries and benefits

69,385

 

149,666

  Occupancy

43,742

 

22,589

  Business development

90,856

 

120,100

  Professional fees

179,737

 

116,683

  Stock-based compensation

5,273

 

407,053

  Office and other

15,327

 

43,276

    Total operating expenses

404,320

 

859,367

 

 

 

 

(Loss) from operations

(393,665)

 

(845,150)

 

 

 

 

Other income (expense):

 

 

 

  Interest expense

(340,250)

 

(162,613)

  Change in fair value of derivative liability

(386,300)

 

847,314

    Total other income (expense)

(726,550)

 

684,701

 

 

 

 

Loss from continuing operations

(1,120,215)

 

(160,449)

 

 

 

 

Discontinued operations

 

 

 

   Discontinued operations, net of tax  

-

 

(189,194)

Net (loss)

(1,120,215)

 

(349,643)

 

 

 

 

Income (loss) attributable to noncontrolling interests

2,209

 

(9,936)

Net (loss) attributable to common stockholders

$  (1,122,424)

 

$     (339,707)

 

 

 

 

Basic and diluted:

 

 

 

     (Loss) per share from continuing operations

$           (0.05)

 

$           (0.01)

     (Loss) per share from discontinued operations

-

 

(0.01)

 

 

 

 

     Net (loss) per share

$           (0.05)

 

$           (0.02)

Weighted average number of common shares:

 

 

 

     Basic and diluted

24,136,693

 

24,136,693


See notes to consolidated financial statements.




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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

(UNAUDITED)

 

2015

 

2014

Cash flows

 

 

 

  Net (loss)

$   (1,120,215)

 

$      (349,643)

  Adjustment to reconcile net (loss) to net cash provided by (used in) operating activities:

 

 

 

    Depreciation and amortization

-

 

1,132

    Accretion of debt discount

187,062

 

112,977

    Stock-based compensation

5,273

 

407,053

    Change in fair value of derivative liability

386,300

 

(847,314)

 Change in operating assets and liabilities:

 

 

 

    (Increase) in due from clearing organization

-

 

(364,418)

    (Increase) in accounts receivable

-

 

(22,500)

    (Increase) in advances to registered representatives and employees

-

 

(4,094)

    Decrease (increase) in prepaid expenses and other current assets

12,889

 

(80,384)

    Increase in commissions payable

-

 

654,896

    Increase in deferred revenue

91,100

 

-

    Increase in accounts payable and accrued expenses

248,229

 

624,986

      Net cash (used in) provided by operating activities

(189,362)

 

132,691

 

 

 

 

Cash flows from investing activities

 

 

 

  Repayment of advances from related parties

7,300

 

-

 

 

 

 

Cash flows from financing activities

 

 

 

  Bank overdraft

32,244

 

-

  Proceeds from promissory notes

175,000

 

229,987

  Repayment of convertible promissory notes

-

 

(250,000)

      Net cash provided by (used in) financing activities

207,244

 

(20,013)

 

 

 

 

Net change in cash

25,182

 

112,678

Cash, beginning of period

54,977

 

463,610

 

 

 

 

Cash, end of period

$          80,159

 

$       576,288


(Continued on next page)



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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

(UNAUDITED)


 

2015

 

2014

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

  Cash paid for income taxes

$                 50

 

$           5,855

 

 

 

 

  Cash paid for interest

$                   -

 

$         50,200

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

  Value of warrants issued in connection with debt

$        143,827

 

$                   -

 

 

 

 

  Promissory note issued for consulting services

$        188,000

 

$                   -


See notes to consolidated financial statements.





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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

(UNAUDITED)


1.  ORGANIZATION


Organization


Global Arena Holding, Inc. (formerly, “Global Arena Holding Subsidiary Corp.”) (“GAHI”), was formed in February 2009, in the state of Delaware.  GAHI and its subsidiaries (the “Company”) is a financial services firm that services the financial community as follows (see Note 13):


Global Arena Investment Management LLC (“GAIM”), a wholly owned subsidiary, provides investment advisory services to its clients.  GAIM was formally registered with the SEC as an investment advisor, and formally cleared all of its business through Fidelity Advisors (“Fidelity”), its correspondent broker.


In January 2013, the Company acquired a 66.7% ownership interest in MGA International Brokerage LLC (“MGA”). MGA is a full service insurance broker, which provides a broad array of insurance and risk management products and services.


On February 25, 2015, Global Election Services, Inc. (“GES”), a wholly owned subsidiary was incorporated under the laws of the State of Delaware. GES provides comprehensive technology-enabled election services primarily for organized labor associations.


Sale of Global Arena Capital Corp.


Global Arena Capital Corp. (“GACC”) was our wholly owned subsidiary through August 5, 2014 and was a full service financial services company. GACC was a broker-dealer registered with the Securities and Exchange Commission (“SEC”).  The Company was also a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corp (“SIPC”). GACC was engaged in the securities business, which comprised several classes of securities transactions such as equities, corporate and municipal bonds, mutual funds, insurance and options, all of which they executed as risk-less principal and agency transactions.


On August 5, 2014, GAHI entered into an Agreement with PMC Capital, LLC (“PMC Capital”) and Barbara Desiderio pursuant to which GAHI agreed to sell its 100% interest in GACC to PMC Capital, subject to the approval from FINRA.  The cash consideration for the common stock was $2,000,000 and the forgiveness of the intercompany amounts payable by GAHI and its subsidiaries to GACC of $1,330,877.



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The results of operations of GACC has been reported as discontinued operations as: 1) the operations and cash flows of GACC were eliminated from the ongoing operations of the Company as a result of the sale and 2) the Company did not have any significant continuing involvement in the operations of GACC after the sale. The Company has presented the operations of GACC as discontinued operations, and retrospectively reclassified the operating results for the prior period presented.


Revenue and operating expenses of the discontinued operations for the three months ended March 31, 2014 are as follows:


 

For the Three Months Ended March 31, 2014

 

 

Revenues

 

  Commissions and other

$ 7,574,733

 

 

    Total revenues

7,574,733

 

 

Operating expenses

 

  Commissions

6,270,050

  Salaries and benefits

200,141

  Occupancy

20,906

  Business development

9,418

  Professional fees

93,042

  Clearing and operations

469,774

  Regulatory fees

17,372

  Settlement of litigation

 650,000

  Office and other

27,099

 

 

    Total operating expenses

7,757,802

 

 

(Loss) from operations

(183,069)

 

 

Income taxes

6,125

(Loss) from discontinued operations


$   (189,194)




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Going Concern


The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates the continuation of the Company as a going concern. The Company has generated recurring losses and cash flow deficits from its continuing operations since inception and has had to continually borrow to continue operating. In addition, with the sale of GACC in August 2014, which was the Company’s principal operating business, the Company’s continuing operations are insufficient to support its ongoing activities. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The continued operations of the Company are dependent upon its ability to raise additional capital, obtain additional financing and/or acquire or develop a business that generates sufficient positive cash flows from operations.  In May, 2015, the Company entered into an agreement and plan of merger with Blockchain Technologies Corporation, which holds provisional patents and intellectual property for creating new 3D Blockchain technology.  The management of the Company is also in negotiations with other companies they believe should be beneficial to the Company’s operations. Subsequent to March 31, 2015, the Company raised an additional $115,000 from the issuance of convertible promissory notes. Management is hopeful that with its new focus on business acquisitions and their ability to raise additional funds that the Company should be able to continue as a going concern (see Note 13).


The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Accounting and Presentation


The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of GAHI and its wholly-owned and majority owned subsidiaries, GES, GAIM, GACOM, Lillybell and MGA. The operations of GACC are included through August 7, 2014, the date of sale and have been reflected as discontinued operations for the period presented.  All significant intercompany accounts and transactions have been eliminated in consolidation.  


The unaudited interim consolidated financial statements of the Company as of March 31, 2015 and for the three months ended March 31, 2015 and 2014, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the SEC which apply to interim financial statements. Accordingly, they do not include all of the information and footnotes normally required by accounting principles generally accepted in the United States of America for annual financial statements. The interim



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consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K for the year ended December 31, 2014, previously filed with the SEC.  In the opinion of management, the interim information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2015.


Revenue Recognition


The Company’s revenue recognition policies comply with SEC revenue recognition rules and the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-10-S99.  The Company earns revenues through various services it provides to its clients.  Advisory fees are on a contractual basis with the fee stipulated in the contract and are recognized based on the terms of the contract during the period the service is provided.  Insurance commissions are recognized at the later of the billing or the effective date of the related insurance policies, net of an allowance for estimated policy cancellations.


Customer security transactions and the related commission income and expenses were recorded as of the trade date.  GACC generally acted as an agent in executing customer orders to buy or sell listed and over-the-counter securities in which it did not make a market, and charged commissions based on the services the Company provided to its customers.


Election services income is recognized at the presentation of the certification of the election results. The payments received in advance are recorded as deferred revenue on the balance sheet.


Use of Estimates


The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.


Fair Value of Financial Instruments


FASB ASC 820, “Fair Value Measurement” defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for that asset or liability.  The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.



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Goodwill


In accordance with FASB ASC 805 “Business Combinations” (“ASC 805”), the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree were recognized at the acquisition date and measured at their fair values as of that date.  Goodwill represents the excess of purchase price over the fair value of net assets acquired in a business combination and is not amortized in accordance with FASB ASC 350, “Intangibles – Goodwill and Other” (“ASC 350”). ASC 350 addresses the amortization of intangible assets with defined lives and the impairment testing and recognition for goodwill and indefinite-lived intangible assets. The Company is required to evaluate the carrying value of its goodwill for potential impairment on an annual basis or more frequently if indicators arise. While the Company may use a variety of methods to estimate fair value for impairment testing, its primary methods are discounted cash flows and a market based analysis. When appropriate, the carrying value of these assets is reduced to fair value.  No impairment to the carrying value of goodwill has been identified by the Company as of March 31, 2015.


Cash and Cash Equivalents


The Company considers all demand and time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents.  


Convertible Debt


Convertible debt is accounted for under FASB ASC 470, “Debt – Debt with Conversion and Other Options.”  The Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt that has conversion features at fixed or adjustable rates that are in-the-money when issued and records the fair value of any warrants issued with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to the warrants and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features, both of which are credited to additional paid-in capital.  The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing stock options, except that the contractual life of the warrant is used.  Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis.  The allocated fair value of the BCF and warrants are recorded as a debt discount and is accreted over the expected term of the convertible debt as interest expense.  




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The Company accounts for modifications of its Embedded Conversion Features (“ECF’s”) in accordance with the FASB ASC 470-50-40-12 and 40-15-16 which requires the modification of a convertible debt instrument that changes the fair value of an embedded conversion feature and the subsequent recognition of interest expense or the associated debt instrument when the modification does not result in a debt extinguishment pursuant to FASB ASC 470-50-40/55.


Derivative Financial Instruments


In connection with the issuance of certain warrants that include price protection, reset or anti-dilution provisions, the Company determined that these provision features are embedded derivative instruments pursuant to FASB ASC 815 “Derivatives and Hedging.”  These embedded derivatives are adjusted to fair value at each balance sheet date with the change recognized in operations.


Advertising Costs


Advertising costs are expensed as incurred.  Advertising costs, which are included in business development expenses, were deemed to be de minimus for the three months ended March 31, 2015 and 2014.


Stock-Based Compensation


The fair value of stock options and stock warrants issued to third party consultants and to employees, officers and directors are recorded in accordance with the measurement and recognition criteria of FASB ASC 505-50, “Equity-Based Payments to Non-Employees” and FASB ASC 718, “Compensation – Stock Based Compensation,” respectively.


The options and warrants are valued using the Black-Scholes valuation method. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables.  These subjective variables include, but are not limited to the Company’s expected stock price volatility over the expected term of the awards, and actual and projected stock option and warrant exercise behaviors.


Because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options and warrants.




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Noncontrolling Interests


The Company accounts for its less than 100% interest in consolidated subsidiaries in accordance with FASB ASC 810, “Consolidation,” and accordingly the Company presents noncontrolling interests as a component of equity on its consolidated balance sheets and reports the noncontrolling interests’ share of net income or loss under the heading “net income (loss) attributable to noncontrolling interests” in the consolidated statements of operations.


Income Taxes


The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes,” which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and liabilities represent the future tax consequences for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.  Deferred taxes are also recognized for operating losses that are available to offset future taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.  As of March 31, 2015 and December 31, 2014, the Company had deferred tax assets of approximately $ 4,916, 000 and $4,550,000, respectively, for net operating loss carryforwards, which were fully reserved by a valuation allowance due to the significant uncertainty with respect to its future realization.


The Company follows the provisions of FASB ASC 740-10-25, which prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns.  FASB ASC 740-10-25 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions.


Reclassifications


Certain amounts in the prior periods’ financial statements have been reclassified for comparative purposes to conform to the presentation principally related to discontinued operations in the financial statements.  These reclassifications had no effect on previously reported earnings.




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3.  RECENTLY ISSUED ACCOUNTING STANDARDS


In February 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-02—Consolidation (Topic 810). The amendments in this Update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities; (2) Eliminate the presumption that a general partner should consolidate a limited partnership; (3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; (4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. This accounting standard updates is not expected to have an effect on the Company’s consolidated financial statements.


In January 2015, the FASB issued Accounting Standards Update ("ASU") ASU 2015-01 – Income Statement – Extraordinary and Unusual Items (Subtopic 225-20). This ASU addressed the simplification of income statement presentation by eliminating the concept of extraordinary items. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This accounting standard update is not expected to have an effect on the Company’s consolidated financial statements.


In August 2014, the FASB issued authoritative guidance that requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern and requires additional disclosures if certain criteria are met. This guidance is effective for fiscal periods ending after December 15, 2016, with early adoption permitted. The adoption of this guidance is not expected to impact our consolidated financial statements or related disclosures.


In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities: Elimination of Certain Financial Reporting Requirements”, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.  This ASU amends FASB ASC Topic 915, Development Stage Entities, to remove all incremental financial reporting requirements for development stage entities, thereby improving financial reporting by reducing the cost and



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complexity associated with providing that information. For public business entities, these amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.  Earlier implementation is allowed for any period where the reporting entity’s annual or interim financial statements have not yet been made available for issuance.  This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.


In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition”. The core principle of this updated guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new rule also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Companies are permitted to adopt this new rule following either a full or modified retrospective approach. Early adoption is not permitted. The FASB, subject to final approval, has agreed to defer the effective date of this ASU by one year. The Company has not yet determined the potential impact of this updated authoritative guidance on its consolidated financial statements.

 

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, which amends the requirements for reporting discontinued operations. Under ASU 2014-08, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. In addition, this ASU requires additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. The guidance is effective for annual and interim periods beginning after December 15, 2014, with early adoption permitted. This updated authoritative guidance did not have a material impact on the consolidated financial statements.




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4.  NET INCOME (LOSS) PER SHARE


The Company computes net income (loss) per common share in accordance with FASB ASC 260, “Earnings Per Share” (“ASC 260”).  Under the provisions of ASC 260, basic net income (loss) per common share is computed by dividing the amount available to common stockholders by the weighted average number of shares of common stock outstanding during the period.  


Diluted net loss per common share for three months ended March 31, 2015 and 2014 excluded the dilutive effect of common stock equivalents. In accordance with ASR 260, if their inclusion would be antidilutive to the income (loss) from continuing operations, they are to be excluded and the number of shares utilized shall be used in reporting all other diluted per share amounts. As the Company has losses from continuing operations for these periods, no common stock equivalents were utilized in the per share calculations. The Company’s common stock equivalents were excluded in the computation of diluted net (loss) per share since their inclusion would be anti-dilutive. Total shares issuable upon the exercise of all outstanding stock options, warrants and conversion of convertible promissory notes and their related accrued interest for the three months ended March 31, 2015 and 2014 were as follows:


 

 

2015

 

2014

Warrants

 

38,136,449

 

13,275,916

Convertible debt and accrued interest

 

9,585,586

 

7,815,133

Stock options

 

2,075,000

 

2,140,625

 

 

 

 

 

Common stock equivalents

 

49,797,035

 

23,231,674


5.  DERIVATIVE FINANCIAL INSTRUMENTS


On December 31, 2012, in connection with an extension of the maturity date of certain convertible notes which were due on May 31, 2012, the Company issued the holder a warrant to purchase shares of common stock of the Company not exceeding 9.99% of the issued and outstanding shares and potential issuable shares related to outstanding options, warrants and convertible debt of the Company. The warrants, which were to expire on December 31, 2014, were extended to March 31, 2016. The Company determined that the anti-dilution provision feature of the warrants to be an embedded derivative instrument.  This derivative is adjusted to fair value at each balance sheet with the changes in fair value recognized in operations.  As of March 31, 2015 and December 31, 2014 the shares of common stock that the holder was entitled to purchase under the warrant were 6,294,345 and 5,399,742, respectively. The addition of 894,603 shares was due to the anti-dilution provisions of the warrant caused by the issuance of additional debt with warrants during the quarter ended March 31, 2015. The Company uses the



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Black-Scholes valuation method to value the derivative instruments at inception and on subsequent valuation dates. Weighted average assumptions used to estimate fair values are as follows:


 

 


March 31,

2015

December 31, 2014

Issuance,

December 31, 2013

Expected volatility

 

508%

491%

316%

Risk free interest rate

 

0.23%

0.67%

0.13%

Expected life (years)

 

1

1.25

1


For the three months ended March 31, 2015 and 2014, the Company recognized a change in this derivative liability of $(386,300) and $811,600, respectively, in other income (expense).


On November 25, 2013, the Company repurchased 714,286 shares of its common stock and the 25% membership interest in GAIM, which was previously sold to FireRock in 2012, by issuing a convertible note in the amount of $250,000, which was originally due on December 31, 2013 and extended to and paid on January 6, 2014. The holder of the note was entitled to convert all or a portion of the convertible note plus any unpaid interest into shares of common stock at the lesser of $0.35 per share or 10% discount to the market value the day prior to the date of conversion. The Company determined that the embedded conversion price discount was a derivative instrument.  This derivative liability was adjusted to fair value at each balance sheet with the changes in fair value recognized in operations prior to its extinguishment in January 2014. For the three months ended March 31, 2015 and 2014, the Company recognized a change in this derivative liability of $0 and $35,714 in other income (expense).


6.  FAIR VALUE MEASUREMENTS


FASB ASC 820 specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs).  In accordance with FASB ASC 820, the following summarizes the fair value hierarchy:


Level 1 Inputs – Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.


Level 2 Inputs – Inputs other than the quoted prices in active markets that are observable either directly or indirectly.


Level 3 Inputs –Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurements.



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ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.  Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company’s assessment of the significance of particular inputs to these fair measurements requires judgment and considers factors specific to each asset or liability.


Cash, accounts receivable, cash overdraft, accounts payable and accrued expenses and deferred revenue – The carrying amounts reported in the consolidated balance sheets for these items are a reasonable estimate of fair value due to their short term nature.


Promissory notes payable and convertible promissory notes payable – Promissory notes payable and convertible promissory notes payable are recorded at amortized cost.  The carrying amount approximates their fair value.


Derivative financial instruments – The fair value of liabilities for warrants with dilutive price reset or anti-dilution provisions and for certain embedded conversion options are determined utilizing the Black-Scholes valuation method.


The following table presents the Company’s assets and liabilities required to be reflected within the fair value hierarchy as of March 31, 2015 and December 31, 2014.


March 31, 2015

 

Level 1

 

Level 2

 

Level 3

 

Total

Derivative financial   instruments

 

$                 -

 

$               -

 

$    817,700

 

$     817,700

Promissory notes

 

-

 

-

 

1,607,560

 

1,607,560

 

 

 

 

 

 

 

 

 

Total

 

$                 -

 

$               -

 

$ 2,425,260

 

$  2,425,260

 

 

 

 

 

 

 

 

 

December 31, 2014

 

Level 1

 

Level 2

 

Level 3

 

Total

Derivative financial instruments

 

$                 -

 

$               -

 

$    431,400

 

$    431,400

Promissory notes

 

-

 

-

 

1,201,325

 

1,201,325

 

 

 

 

 

 

 

 

 

Total

 

$                 -

 

$               -

 

$ 1,632,725

 

$ 1,632,725




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The following table presents the Level 3 reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs for the derivative warrants:

 

 

 

Balance, December 31, 2014

 $

1,632,725


 

 

 

Proceeds from promissory notes

 

175,000

Promissory note issued for consulting services

 

188,000

Net accretion of debt discount

 

43,535

Change in fair value included in other (income) expenses

 

386,300


Balance, March 31, 2015

 $

2,425,260


7. STOCK OPTIONS


Stock Option Plan


On June 27, 2011, the Board of Directors adopted a Stock Awards Plan (“Plan”).  The purpose of the Plan is to attract, retain and motivate employees, directors and persons affiliated with the Company and to provide such participants with additional incentive and reward opportunities.  The awards may be in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, phantom stock awards, or any combination of the foregoing. The total number of shares of stock reserved for issuance under the Plan is 3,000,000.  On July 17, 2012, the Board of Directors approved the issuance of non-qualified stock options for the purchase of an aggregate of 1,725,000 shares of common stock under the Plan to certain employees, officers and directors. The options are exercisable at $0.45 per common share and expire three years after their issuance.  The options are to vest over a two-to-three-year period with a fair value of approximately $500,000 at the grant date to be recognized over the vesting period.


Weighted average assumptions used to estimate the fair value of stock options on the date of grant are as follows:


 

 

July 17, 2012

    Expected dividend yield

 

$ 0

    Expected stock price volatility

 

130%

    Risk free interest rate

 

0.32%

    Expected life (years)

 

3 years


The stock-based compensation related to the Plan, included in stock compensation expense in the consolidated statements of operations, was $5,273 and $66,898 for the three months ended March 31, 2015 and 2014, respectively.



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On December 27, 2012, GAHI granted to an employee, an option to purchase 350,000 shares of common stock. The option is exercisable at $0.45 per common share and expires on July 17, 2015.  The option vested 50% in July 2013 and 100% in July 2014 with a fair value of approximately $58,000 at the grant date which was recognized over the vesting period. The options granted to this employee became fully vested in March 2014 upon his departure from the Company in accordance with an arrangement with the Company. Weighted average assumptions used to estimate the fair value of stock options on the date of grant were as follows:


 

 

December 27, 2012

    Expected dividend yield

 

$ 0

    Expected stock price volatility

 

140%

    Risk free interest rate

 

0.25%

    Expected life (years)

 

2.5 years


The stock-based compensation related to this option, included in stock compensation expense in the consolidated statements of operations, was $0 and $20,492 for the three months ended March 31, 2015 and 2014, respectively.


 Other Options


On January 29, 2013, in connection with the acquisition of MGA, the Company issued an option to purchase 300,000 shares of common stock exercisable at $0.25 per common share, which expired on January 28, 2014. The option was extended for another year and expired in January 2015. The options vested on the grant date, with a fair value of approximately $34,000 which was recognized as goodwill.


Weighted average assumptions used to estimate the fair value of stock options on the date of grant are as follows:


 

 

January 29, 2013

    Expected dividend yield

 

$ 0

    Expected stock price volatility

 

120%

    Risk free interest rate

 

0.15%

    Expected life (years)

 

1 year




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The Company will issue new shares of common stock upon the exercise of outstanding stock options.  The following is a summary of stock option activity:


 

 






Shares

 


Weighted Average Exercise Price

 

Weighted- Average Remaining Contractual Life

 



Aggregate Intrinsic

Value

Outstanding at December 31, 2014

 

2,375,000

 

$  0.42

 

0.48 years

 

$          -

Granted

 

-

 

-

 

-

 

-

Exercised

 

-

 

-

 

-

 

-

Cancelled and expired

 

300,000

 

$0.25

 

-

 

-

Forfeited

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

Outstanding at March 31, 2015

 

2,075,000

 

$ 0.45

 

0.30years

 

$          -

 

 

 

 

 

 

 

 

 

Vested and expected to vest at March 31, 2015

 


2,075,000

 


$ 0.45 

 


0.30years

 


$          -

 

 

 

 

 

 

 

 

 

Exercisable at March 31, 2015

 

2,075,000

 

  $ 0.45 

 

0.30years

 

$          -


The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock. There were no options exercised during the three months ended March 31, 2015.


As of March 31, 2015, approximately $879 of unrecognized compensation costs for the above options will be recognized in the second quarter of 2015.





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8.  CONVERTIBLE PROMISSORY NOTES


 

March 31,

December 31,

 

    2015

    2014

Convertible promissory notes with interest at 12% per annum, convertible into common shares at the fixed price of $0.25 per share. Maturity dates range from June 15, 2015 to November 11, 2018, net of unamortized discount of $634,349 and $677,584, respectively. (A)

$    789,051

$    570,816

Convertible promissory notes with interest at 12% per annum, convertible into common shares at a fixed price of $0.35 per share. Maturity dates of October 13, 2014 to October 22, 2014, net of unamortized discount of $0.(B)

338,509

150,509

Convertible promissory notes with interest at 8% per annum, convertible into common shares at a fixed price of $0.30 per share. Matured on October 13, 2013. (C)

250,000

250,000

 

 

 

 

1,377,560

971,325

Less current portion:

(1,237,816)

(858,225)


Long-term portion:

$      139,744

$      113,100


(A)    In May 2015, the Company extended the maturity date for the loans previously expired on April 23, 2015 and April 30 2015 to June 15, 2015 and June 30, 2015, respectively.


In January and March 2015, the Company issued two convertible promissory notes in the principal aggregate amount of $175,000 at a stated interest rate of 12% per annum. In addition, the Company granted warrants to purchase 1,330,000 shares of common stock at an exercise price of $0.25 per share.  The warrants have a life of 3 years and were fully vested on the date of the grant.  In addition, the warrant agreements have a cashless exercise provision.  The debt discount was comprised of $79,274 for the relative fair value of the warrants and $ 64,554 for the beneficial conversion feature of the notes. The convertible promissory note for $75,000 matures on August 30, 2015 and the $100,000 note matures on September 13, 2015. In April 2015, the $100,000 loan was amended and the maturity date was changed to June 15, 2015. The holders of the notes are entitled to convert all or a portion of the convertible notes plus any unpaid interest, at the lender’s sole option, into shares of common stock at a conversion price of $0.25 per share.  


(B)    A note for $400,000, which matured on October 22, 2014, was repaid $100,000 in August 2014, $50,000 in September 2014 and $100,000 in December 2014. The remaining balance of $150,000 was not repaid on its due date of October 22, 2014. On November 11, 2014, the Company extended the maturity date of this note to December 15, 2014. On April 13, 2015, the lender agreed to another extension to extend the maturity date to May 15, 2015.



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On January 5, 2015, the Company issued another convertible promissory note for $188,000, convertible at $.35 per common share, for consulting services, which matured on May 15, 2015.


On May 21, 2015, these two notes were assigned to Capitoline Ventures II, LLC and were combined into a new convertible promissory note in the principal amount of $468,299 due on November 21, 2015. This includes accrued interest of approximately $30,000 plus a penalty for nonpayment of $100,000 charged in January 2015.  The new note bears no interest.  If the note is not paid when due, the note will include interest at 12% from the date of default.

 

(C)    In November 2014, the Company extended the maturity date of this note to December 31, 2014 in exchange for (1) a new warrant to purchase 500,000 shares of common stock at an exercise price at $0.25 per share with a five year life; and (2) an extension of all existing warrants for another five years and the lowering of the warrants exercise price to $0.25. The above two amendments were recorded, net of a discount of $102,000. In April 2015, the Company extended the maturity date to May 15, 2015. This note is currently in default and the Company is still in negotiations with the debt holder.


The Company recorded $187,062 and $112,977 of interest expense pursuant to the amortization of the above note discounts for the three months ended March 31, 2015 and 2014, respectively.


The intrinsic value for the convertible feature of outstanding convertible promissory notes was approximately $0 as of March 31, 2015 and December 31, 2014.


9.  WARRANTS


On April 30, 2013, the Company, Daniel D. Rubino, Robert M. Pickus, and George C. Dolatly (collectively, the “GCA Principals”) and GCA Ventures, LLC (“GCA”) entered into a management and investor rights agreement.  Pursuant to the agreement, the Company will receive financial and management consulting services from GCA and the GCA Principals in return for warrants to purchase a total of 2,500,000 common shares, at an exercise price of $0.25 per share, which were issued in three separate tranches. The first tranche of one million warrants was issued concurrently with the signing.  The second and third tranche of 750,000 warrants each were issued six months and one year after the date of the agreement, respectively.  Each tranche of warrants is to expire seven years after issuance. The fair value of approximately $891,500 at the grant date was recognized over the vesting period. Weighted average assumptions used to estimate the fair value of warrants on the date of grant are as follows:  



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April 30, 2013

    Expected dividend yield

 

$ -

    Expected stock price volatility

 

190%

    Risk free interest rate

 

1.11%

    Expected life (years)

 

7 years


The stock-based compensation related to this option, included in stock compensation expense in the consolidated statements of operations, was $0 and $66,863 for the three months ended March 31, 2014 and 2013, respectively.


On March 13, 2014, the Company issued a three-year warrant to purchase 500,000 shares of common stock at $0.25 per share to a consultant pursuant to a consulting agreement. The warrant was fully vested when issued.  The fair value of approximately $252,800 at the grant date was recognized in the three months ended March 31, 2014. Weighted average assumptions used to estimate the fair value of warrants on the date of grant are as follows:  



 

 

March 13, 2014

    Expected dividend yield

 

$ -

    Expected stock price volatility

 

288%

    Risk free interest rate

 

0.74%

    Expected life (years)

 

3 years




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The following tables summarize the warrant activities:


 



Shares

 

Weighted Average   Exercise Price

Weighted- Average Exercisable

 


Aggregate

Intrinsic Value

 

 

 

 

 

 

 

Outstanding at December 31, 2014


35,911,846

 


$  0.24


35,911,846

 


$     426,580

 

 

 

 

 

 

 

Granted

2,224,603

 

0.15

2,224,603

 

-

Exercised

-

 

-

-

 

-

Cancelled and surrendered


-

 


-


-

 


-

 

 

 

 

 

 

Outstanding at March 31, 2015


38,136,449


$  0.24


38,136,449

 


$ 811,970

 

 

 

 

 


Exercise

Price


Average

Outstanding


Average

Contractual Life


    Average

 Exercise price


          Warrants

          Exercisable

0.001

$0.25 to $0.75

6,294,345

31,842,104

1.00

3.21

$   0.001

$     0.28

6,294,345

31,842,104

 

 

 

 

 

 

38,136,449

-

-

35,311,846


10.  RELATED PARTIES


In December 2014, the Company loaned $7,300 with interest at 3% to one of its potential acquisitions, Elections Services Solutions, LLC (“ESS”), which was repaid in full in March 2015. The chairman of the Board of ESS is the father of the Company’s Chief Executive Officer.


The Receivable from related parties represents advances to Broad Sword Holdings, LLC. owned by the Chief Executive Officer of the Company. These advances are non-interest bearing and payable on demand.  As of March 31, 2015 and December 31, 2014, the receivable was approximately $17,000 and $24,000.




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11. LEASES


In November 2014, the Company moved to a new location and entered into to a lease agreement with a monthly rental of $10,700, which expires on May 31, 2015. For the three months ended March 31, 2015 and 2014, the Company was charged approximately $43,742 and $22,589 for continuing and discontinued operation’s office space.  The Company’s continuing operations reduced its space after the sale of GACC. Accordingly, the Company did not allocate the rent previously charged to the discontinued operations back to continuing operations in the consolidated statements of operations. The minimum future rentals under this lease as of March 31, 2015 were approximately $21,000.


12.  COMMITMENTS AND CONTINGENCIES


Litigation claims and settlements


The Company may be involved in legal proceedings in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.


On October 10, 2013, GACOM settled a complaint with the National Futures Association for a fine of $50,000 for certain noncompliance with Commodity Futures Trading Commission regulations.  The fine has not been paid and is included in accounts payable and accrued expenses at March 31, 2015 and December 31, 2014.


Named directors, officers, employees and/or registered representatives of GACC have been called before FINRA for on-the-record interviews in connection with certain FINRA inquiries. GACC has responded to multiple requests for documents and FINRA has taken on-the-record testimony. On October 27, 2014 FINRA indicated that it might recommend enforcement proceedings against GACC, our chairman John Matthews and Brian Joseph Hagerman, the former president and chief compliance officer of GACC. FINRA’s action is commonly referred to as a “Wells Notice” and is a preliminary determination by FINRA staff to recommend disciplinary action against GACC and these individuals.  FINRA is not proposing disciplinary action against the Company.  The allegations are against GACC and these individuals and assert that there were violations of Sections 17(a)(2) and 5 of the Securities Act of 1933 (“Securities Act”); NASD Rules 3010 and 3040; and FINRA Rules 2010, 5122(b)(2) and 5122(b)(1)(B).  GACC and Messrs. Matthews and Hagerman are responding to this Wells Notice and believe that they have meritorious arguments. At this time, management is unable to determine what the ultimate outcome of these proceedings will be and whether there will be a material impact on the Company’s operations or the consolidated financial statements.




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On February 11, 2015, John S. Matthews was advised by the staff of FINRA’s Department of Enforcement (the “Staff”) that they intended to recommend that FINRA commence a disciplinary action against Mr. Matthews, in his former capacity as an executive of GACC for a violation of FINRA Rules 2010 and 8210 by failing to provide information to the Staff in what the Staff considered to be a timely manner. Mr. Matthews provided additional materials to FINRA subsequent to the February 11, 2015 notice and submitted a response to the Staff’s allegations on February 25, 2015, disputing the proposed charges against him. Mr. Matthews has at all times cooperated with the Staff’s inquiries and continues to do so.


On April 10, 2014, the Legal Section of FINRA formally notified GACC that it had made a preliminary determination to recommend that disciplinary action be brought against GACC for (1) failing to buy and sell corporate bonds at prices that were fair; and (2) failing to have in place a supervisory system that was reasonably designed to achieve compliance with applicable securities laws and regulations and FINRA rules.  GACC has responded and intends to contest this matter.  Management is unable to determine the ultimate outcome, if any, to the Company’s consolidated financial statements at this time.  


On July 2, 2014, an action was commenced by a group of individuals against GACC, the Company, and the chief executive officer of the Company, which asserts claims for minimum wage and overtime violations under New York State Labor Law, and seeks damages in an amount to be determined at trial, plus interest, attorneys’ fees and costs. Pursuant to a stipulation, the time for defendants to answer, move or otherwise respond to the Complaint was extended to and including June 1, 2015.


The Company and certain of its officers were named in connection with a demand for repayment of $695,000 by PMC LLC, in a letter dated October 16, 2014 relating to the Stock Purchase Agreement by and among GAHI and PMC Capital, LLC and Barbara Desiderio, dated as of August 5, 2014. The demand seeks repayment for expenditures made by GACC prior to the sale and the failure to meet certain minimum requirements in the Stock Purchase Agreement. At this time, the Company is unable to determine the ultimate outcome of the demand or whether it will result in a formal proceeding or action against the Company or any of its officers.


13.  SUBSEQUENT EVENTS


In April and May 2015, the Company issued unsecured convertible promissory notes in the aggregate amount of $140,000 at a stated interest rate of 12% per annum which are convertible into common stock of the Company at $0.25 per share. The convertible notes mature from June 30, 2015 to August 30, 2015. In addition, the Company granted warrants to purchase an aggregate amount of 1,741,000 shares of common stock at an exercise price of $0.25 per share.  




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On May 20, 2015, GAHI Acquisition Corp., a wholly owned subsidiary of the Company, was incorporated under the laws of the State of Delaware to be utilized for potential acquisitions.


On May 21, 2015, the lender in Note 8 (B) assigned the two notes to Capitoline Ventures II, LLC which have been combined into a new convertible promissory note in the principal amount of $468,299 due on November 21, 2015.


On April 20, 2015, the Board of Directors approved a strategic shift of the Company’s financial services operations by discontinuing three of its subsidiaries.  The subsidiaries are: 1) Global Arena Commodities Corporation (100% owned) which has been inactive, 2) Lillybell Entertainment LLC (“Lillybell”) (66.67% owned) which has also been inactive and 3) MGA International Brokerage LLC (“MGA”) (66.67% owned) which was an operating company.  The Board of Directors has agreed to offer the Company’s interest in Lillybell and MGA to each of their minority shareholders for One Dollar ($1.00).  Commencing with the quarter ended June 30, 2015, these operations and the gain (loss) on the discontinuance of these entities will be reflected in the Company’s financial statements as discontinued operations. These entities have combined assets and liabilities of approximately $70,000 and $81,000, respectively.  The Board believes that Global Arena Investment Management LLC, Global Election Services Inc., and the Blockchain Technologies Corporation potential merger provide the Company with better opportunities for the future.  




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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The following discussion should be read in conjunction with the accompanying unaudited consolidated financial statements and the notes thereto, included in Item 1 in this Quarterly Report on Form 10-Q, and the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and as contained in that report, the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” This discussion contains forward-looking information.  Please see “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.


Forward-looking Statements


Statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operation, as well as in certain other parts of this quarterly report on Form 10-Q (as well as information included in oral statements or other written statements made or to be made by Global Arena Holdings, Inc. (“GAHI”, with our subsidiaries “the Company”, “We”) that look forward in time, are forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, expectations, predictions, and assumptions and other statements which are other than statements of historical facts. Although GAHI believes such forward-looking statements are reasonable, it can give no assurance that any forward-looking statements will prove to be correct. Such forward-looking statements are subject to, and are qualified by, known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by those statements. These risks, uncertainties and other factors include, but are not limited to GAHI’s ability to estimate the impact of competition and of industry consolidation and risks, uncertainties and other factors set forth in GAHI’s filings with the Securities and Exchange Commission, including without limitation to Quarterly Report on Form 10-Q.


GAHI undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q.


Critical Accounting Policies

The Company’s financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by management's applications of accounting policies. Critical



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accounting policies for the Company include revenue recognition, valuation of convertible promissory notes and related warrants, stock and stock option compensation, estimates, and derivative financial instruments.


The financial statements of the Company and subsidiaries include the accounts of GAHI and its wholly-owned subsidiaries and majority owned subsidiaries, GAIM, GACOM, Lillybell, MGA and GES from February 25, 2015, its incorporation date. The operations of GACC are included in the prior quarter have been reflected as discontinued operations since GACC was sold on August 5, 2014.  All significant intercompany accounts and transactions have been eliminated in consolidation.


Revenue Recognition

The Company’s revenue recognition policies comply with SEC revenue recognition rules and FASB ASC 605-10-S99.  The Company earns revenues through various services it provides to its clients.  Advisory fees are on a contractual basis with the fee stipulated in the contract and are recognized based on the terms of the contract during the period the service is provided. Insurance commissions are recognized at the later of the billing or the effective date of the related insurance policies, net of an allowance for estimated policy cancellations.


Election services income is recognized at the presentation of the certification of the election results. The payments received in advance are recorded as deferred revenue on the balance sheet.


Goodwill

In accordance with FASB ASC 805 “Business Combinations” (“ASC 805”), the Company recognized at the acquisition date and measured at their fair values, the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired company.  Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations and is not amortized in accordance with FASB ASC 350, “Intangibles – Goodwill and Other” (“ASC 350”). ASC 350 addresses the amortization of intangible assets with defined lives and the impairment testing and recognition for goodwill and indefinite-lived intangible assets. The Company is required to evaluate the carrying value of its goodwill for potential impairment on an annual basis or more frequently if indicators arise. While the Company may use a variety of methods to estimate fair value for impairment testing, its primary methods are discounted cash flows and a market based analysis. When appropriate, the carrying value of these assets is reduced to fair value.   


Convertible Debt

Convertible debt is accounted for under FASB ASC 470, “Debt – Debt with Conversion and Other Options.”  The Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt that has conversion features at fixed or



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adjustable rates that are in-the-money when issued and records the fair value of any warrants issued with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to the warrants, if any, and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features, both of which are credited to additional paid-in-capital.  The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing stock options, except that the contractual life of the warrant is used.  Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis.  The allocated fair value is recorded as a debt discount and is accreted over the expected term of the convertible debt as interest expense.  


The Company accounts for modifications of its Embedded Conversion Features (ECF’s) in accordance with the FASB ASC 470-50-40-12 and 40-15 through 16 which requires the modification of a convertible debt instrument that changes the fair value of an embedded conversion feature and the subsequent recognition of interest expense or the associated debt instrument when the modification does not result in a debt extinguishment pursuant to FASB ASC 470-50-40/55.


Derivative Financial Instruments

In connection with the issuance of certain warrants that include price protection reset or anti-dilution provisions, the Company determined that these provision features are embedded derivative instruments pursuant to FASB ASC 815 “Derivatives and Hedging.” These embedded derivatives are adjusted to fair value at each balance sheet date with the change recognized in operations.


Stock-Based Compensation

The fair value of stock options and stock warrants issued to third party consultants and to employees, officers and directors is recorded in accordance with the measurement and recognition criteria of FASB ASC 505-50, “Equity-Based Payments to Non-Employees” and FASB ASC 718, “Compensation – Stock Based Compensation,” respectively.


The options and warrants are valued using the Black-Scholes valuation method. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables.  These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected stock option and warrant exercise behaviors.




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Because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options and warrants.


Recent Accounting Pronouncements

Recent accounting pronouncements issued by the FASB and the SEC did not have, are not believed by management to have, a material impact, or are currently evaluating the potential impact of updated authoritative guidance on the Company’s present or future consolidated financial statements.


Trends and Uncertainties

The Company currently has minimal revenues and operations and is investigating potential businesses and companies for acquisition to create and/or acquire a sustainable business. Our ability to acquire or create a sustainable business may be adversely affected by our current financial conditions, availability of capital and/ or loans, general economic conditions which can be cyclical in nature along with prolonged recessionary periods, and other economic and political situations.  


The Company has generated recurring losses and cash flow deficits from its operations since inception and has had to continually borrow to continue operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The continued operations of the Company are dependent upon its ability to raise additional capital, obtain additional financing and/or generate positive cash flows from operations.  As further described in “Liquidity and Capital Resources”, management believes that it will be successful in obtaining additional financing, from which the proceeds will be primarily used to execute its new operating plans. The Company plans to use its available cash and new financing to develop and execute its new business plan and hopefully create and maintain a self-sustaining business.  However, the Company can give no assurances that it will be successful in achieving its plans or if financing will be available or, if available, on terms acceptable to the Company, or at all.  Should the Company not be successful in obtaining the necessary financing to fund its operations, and ultimately achieve adequate profitability and cash flows from operations, the Company would need to curtail certain or all of its operating activities.  


There are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. There are no significant elements of income or loss that do not arise from our continuing operations except for the fair value change on derivative financial instruments and settlement on arbitration.  


The rapid advances in computing and telecommunications technology over the past several decades have brought with them increasingly sophisticated methods of delivering financial services through electronic channels. Along with these advances, though, have



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come risks regarding the integrity and privacy of data, and these risks apply to financial institutions, probably more than any other industry, falling into the general classification of cybersecurity. While it is not possible for anyone to give an absolute guarantee that data will not be compromised, when applicable, the Company shall utilize third-party service providers to secure the Company’s financial and personal data; the Company believes that third-party service providers provide reasonable assurance that the financial and personal data that they hold are secure.


Liquidity and Capital Resources  


As of March 31, 2015, the Company has an accumulated deficit of $13,812,405 and a working capital deficiency of $3,254,850 .  Our ability to continue as a going concern depends upon whether we can ultimately attain profitable operations, generate sufficient cash flow to meet our obligations, and obtain additional financing as needed.


During the three months ended March 31, 2015, the Company had a net loss of $1,120,215 and net cash used in its operating activities was $ 189,362. Comparatively, during the three months ended March 31, 2014, the Company had a loss from continuing operations of $160,440, net loss of $349,643 and net cash provided by its operating activities of $132,691.


For the three months ended March 31, 2015, investing activities was receipts of $7,300 from receivable from related parties.  Comparatively, during the three months ended March 31, 2014, the Company had no investing activities since our available cash was used to repay certain promissory notes.


During the three months ended March 31, 2015, the Company issued two convertible promissory notes in the principal aggregate amount of $175,000 at a stated interest rate of 12% per annum. The debt discount was comprised of $79,274 for the relative fair value of the warrants and $ 64,554 for the beneficial conversion feature of the notes. The convertible promissory notes for $75,000 mature on August 30, 2015 and $100,000 mature on September 13, 2015. In April 2015, the $100,000 loan was amended and the maturity date was changed to June 15, 2015.  As of March 31, 2015, financing activities included a bank overdraft amounting to $32,244.


Comparatively, during the three months ended March 31, 2014, the Company, with proceeds of $229,987 from the issuance of promissory notes and with available cash, was able to pay down convertible debt of $250,000.  


In April and May 2015, the Company issued unsecured convertible promissory notes in the aggregate amount of $140,000 at a stated interest rate of 12% per annum which are convertible into common stock of the Company at $0.25 per share. The convertible notes



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mature from June 30, 2015 to August 30, 2015. In addition, the Company granted warrants to purchase an aggregate amount of 1,741,000 shares of common stock at an exercise price of $0.25 per share.  


On May 20, 2015, GAHI Acquisition Corp.(“GAQ”), a wholly owned subsidiary of the Company, was incorporated under the laws of the State of Delaware to be utilized for potential acquisitions.  


In May 2015, the Company, entered into an agreement and plan of merger with Blockchain Technologies Corporation (“BTC”), a New York corporation, which filed provisional patents and holds intellectual property for creating new 3D Blockchain technology.  Upon consummation of the merger, BTC shall cease to exist and GAQ will be the surviving corporation.  In order to consummate the merger, certain conditions must be met, which include (i) issuance of Company shares in an amount to be determined, (ii) the Company must capitalize GAQ with $1,250,000 plus an amount equal to BTC’s bridge loan then outstanding, (iii) on or before closing, the Company, GAQ and BTC shall have no outstanding liabilities, unless otherwise agreed to, and (iv) the Company will change its name to Blockchain Holdings Corporation.  The plan is to capitalize BTC with the required funding by the sale of new shares of the Company.


On May 21, 2015, as mentioned in NOTE 8 above, two promissory notes were assigned to Capitoline Ventures II, LLC and were combined into a new convertible promissory note in the principal amount of $468,299 due on November 21, 2015. This includes accrued interest of approximately $30,000 plus a penalty for nonpayment of $100,000 charged in January 2015.  The new note bears no interest.  If the note is not paid when due, the note will include interest at 12% from the date of default.


On May 22, 2015, the Company entered into an unsecured convertible promissory note and warrant purchase agreement with Capitoline Ventures II.  Under this agreement, Capitoline has agreed to lend the Company $25,000.  In consideration of this loan, the Company is granting Capitoline a warrant to purchase 310,000 fully paid and non-assessable common shares at a price of $0.25 per share and an unsecured convertible promissory note with a value of $25,000.  The outstanding balance on the promissory note bears interest at an annual rate of 12%, matures on November 22, 2015, and can be converted into common shares at $0.25 per share.


On February 25, 2015, Global Election Services, Inc. (“GES”), was established.  GES is a wholly owned subsidiary of the Company and is a corporation organized under the laws of the State of Delaware.  GES is a US based company that provides comprehensive technology-enabled election services.


The management of the Company is also in negotiations with other companies they believe should be beneficial to the Company’s operations.




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Management is currently in discussions and has a non-binding letter of intent regarding the potential asset acquisition of Election Services Solutions LLC (“ESS”), a US based company that provides comprehensive technology-enabled election services, primarily for Organized Labor Associations. ESS key employees have been in the elections business since 1981, and have managed over 6000 labor union elections.  We are negotiating the principal terms and conditions of such acquisition which would likely involve issuing restricted shares of our common stock as consideration, paying a cash purchase price and assuming certain liabilities. Our chairman is the son of one of the principal stockholders of ESS.  Accordingly, our chairman has recused himself from our Board’s consideration of this potential acquisition.  There can be no assurance that this proposed acquisition will ultimately be consummated.  


Management believed the sale of Global Arena Capital Corp. in August 2014 gave the Company the ability to refocus on its acquisition and growth strategy for the Company’s subsidiary Global Arena Investment Management, a Registered Investment Advisory. Management intends to hire Registered Investment Advisors, and Sub Advisors, to assist in the growth of assets under management. Currently, Management is in the process of changing investment managers, and exploring the possibility of closing it’s off shore investment vehicle and opening a fully registered fund for US clients.


Management continues to focus on other investments with a specific interest in finance, technology and real estate.  


Management believes that it will be able to continue its operations and further advance its acquisition plans. However, management cannot give assurances that such plans will materialize and be successful in the near term or on terms advantageous to the Company, or at all. Should the Company not be successful in its new business plans and ventures and/ or obtain additional financing, the Company would need to curtail certain or all of its operating activities.


The Company’s continuation as a going concern is dependent upon its ability to ultimately attain profitable operations, generate sufficient cash flow to meet its obligations, and obtain additional financing in the interim. Our auditors have included a “going concern” modification in their auditors’ report dated April 15, 2015, included in our form 10K filed with the Securities and Exchange Commission .  Such “going concern” modification may make it more difficult for us to raise funds when needed. The outcome of this uncertainty cannot presently be determined.


The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will actually improve our operating results.




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Results of Operations


Three Months Ended March 31, 2015 compared to the Three Months Ended March 31, 2014.


Revenues from commissions for three months ended March 31, 2015 was $10,655 compared to $14,217 for the three months ended March 31, 2014.  The decrease in revenue of $3,562 is due to less insurance commissions.


Operating expenses for the three months ended March 31, 2015 were $404,320 compared to $859,367 for the three months ended March 31, 2014.  The decrease in operating expenses of $455,047 was principally due to the decrease in salaries and stock based compensation related to the reduced number of employees after the sale of GACC partially offset by a $63,000 increase in professional fees.


Other expense for the three months ended March 31, 2015 was $726,550 compared to other income of $684,701 for the three months ended March 31, 2014, a decrease of $1,411,251, principally due to the increase in the fair value of the derivative liability principally caused by the decrease in our stock price and additional shares required per the warrant agreement and the penalty for nonpayment of $100,000 charged on the GT Marketing loan.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk


Not applicable for smaller reporting companies.


Item 4.  Controls and Procedures


Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of March 31, 2014.  


We do not have sufficient segregation of duties within accounting functions, which is a basic internal control.  Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible.  However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.  Based on this evaluation, our chief executive officer and chief financial officer have concluded such controls and procedures to be not effective as of March 31, 2015 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded,



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processed, summarized and reported, within the time periods specified in the Commission's rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


Evaluation of Changes in Internal Control over Financial Reporting

Our chief executive officer and chief financial officer have evaluated changes in our internal controls over financial reporting that occurred during the three months ended March 31, 2015.  Based on that evaluation, our chief executive officer and chief financial officer, or those persons performing similar functions, did not identify any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Important Considerations

The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time.


Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.




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PART II - OTHER INFORMATION


Item 1.   Legal Proceedings  


The Company may be involved in legal proceedings in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.


On October 10, 2013, GACOM settled a complaint with the National Futures Association for a fine of $50,000 for certain noncompliance with Commodity Futures Trading Commission regulations.  The fine has not been paid and is included in accounts payable and accrued expenses at March 31, 2015 and December 31, 2014.


Named directors, officers, employees and/or registered representatives of GACC have been called before FINRA for on-the-record interviews in connection with certain FINRA inquiries. GACC has responded to multiple requests for documents and FINRA has taken on-the-record testimony. On October 27, 2014 FINRA indicated that it might recommend enforcement proceedings against GACC, our chairman John Matthews and Brian Joseph Hagerman, the former president and chief compliance officer of GACC. FINRA’s action is commonly referred to as a “Wells Notice” and is a preliminary determination by FINRA staff to recommend disciplinary action against GACC and these individuals.  FINRA is not proposing disciplinary action against the Company.  The allegations are against GACC and these individuals and assert that there were violations of Sections 17(a)(2) and 5 of the Securities Act of 1933 (“Securities Act”); NASD Rules 3010 and 3040; and FINRA Rules 2010, 5122(b)(2) and 5122(b)(1)(B).  GACC and Messrs. Matthews and Hagerman are responding to this Wells Notice and believe that they have meritorious arguments. At this time, management is unable to determine what the ultimate outcome of these proceedings will be and whether there will be a material impact on the Company’s operations or the consolidated financial statements.


On February 11, 2015, John S. Matthews was advised by the staff of FINRA’s Department of Enforcement (the “Staff”) that they intended to recommend that FINRA commence a disciplinary action against Mr. Matthews, in his former capacity as an executive of GACC for a violation of FINRA Rules 2010 and 8210 by failing to provide information to the Staff in what the Staff considered to be a timely manner. Mr. Matthews provided additional materials to FINRA subsequent to the February 11, 2015 notice and submitted a response to the Staff’s allegations on February 25, 2015, disputing the proposed charges against him. Mr. Matthews has at all times cooperated with the Staff’s inquiries and continues to do so.



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On April 10, 2014, the Legal Section of FINRA formally notified GACC that it had made a preliminary determination to recommend that disciplinary action be brought against GACC for (1) failing to buy and sell corporate bonds at prices that were fair; and (2) failing to have in place a supervisory system that was reasonably designed to achieve compliance with applicable securities laws and regulations and FINRA rules.  GACC has responded and intends to contest this matter.  Management is unable to determine the ultimate outcome, if any, to the Company’s consolidated financial statements at this time.  


On July 2, 2014, an action was commenced by a group of individuals against GACC, the Company, and the chief executive officer of the Company, which asserts claims for minimum wage and overtime violations under New York State Labor Law, and seeks damages in an amount to be determined at trial, plus interest, attorneys’ fees and costs. Pursuant to a stipulation, the time for defendants to answer, move or otherwise respond to the Complaint was extended to and including June 1, 2015.


The Company and certain of its officers were named in connection with a demand for repayment of $695,000 by PMC LLC, in a letter dated October 16, 2014 relating to the Stock Purchase Agreement by and among GAHI and PMC Capital, LLC and Barbara Desiderio, dated as of August 5, 2014. The demand seeks repayment for expenditures made by GACC prior to the sale and the failure to meet certain minimum requirements in the Stock Purchase Agreement. At this time, the Company is unable to determine the ultimate outcome of the demand or whether it will result in a formal proceeding or action against the Company or any of its officers.


Item 1A.  Risk Factors

Not applicable for smaller reporting company


Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

None


Item 3.   Defaults Upon Senior Securities  

As discussed in detail under Note 8, section c and d, GAHI has outstanding promissory notes which were considered in default.  The Company and the lender have extended the due dates of these outstanding promissory notes.


Item 4.  Mine Safety Disclosures

Not applicable




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Item 5.   Other Information  

On May 22, 2015, the Company entered into an unsecured convertible promissory note and warrant purchase agreement with Capitoline Ventures II.  Under this agreement, Capitoline has agreed to lend the Company $25,000.  In consideration of this loan, the Company is granting Capitoline a warrant to purchase 310,000 fully paid and non-assessable common shares at a price of $0.25 per share and an unsecured convertible promissory note with a value of $25,000.  The outstanding balance on the promissory note bears interest at an annual rate of 12%, matures on November 22, 2015, and can be converted into common shares at $0.25 per share.


Item 6.   Exhibits

Exhibit 10* - Unsecured Convertible Promissory Note and Warrant Purchase

  Agreement between Global Arena Holding, Inc. and Capitoline Ventures II,

  dated May 22, 2015.

Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of

  2002

Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of

  2002

101.INS**   XBRL Instance Document

101.SCH**   XBRL Taxonomy Extension Schema Document

101.CAL**   XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**   XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**   XBRL Taxonomy Extension Label Linkbase Document

101.PRE**   XBRL Taxonomy Extension Presentation Linkbase Document


*  Filed herewith

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. To be filed by amendment.



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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated: June 1, 2015


Global Arena Holding, Inc.



/s/John Matthews

   John Matthews

   Chief Executive Officer


/s/Anthony Crisci, Jr.

   Anthony Crisci, Jr.

   Chief Financial Officer




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