United States
Securities and Exchange Commission
Washington, D.C. 20549
Form
| (Mark One) | |
| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended |
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commissions file number:
(Exact name of registrant as specified in its charter)
| State or other jurisdiction of | I.R.S. Employer Identification Number |
| incorporation or organization |
(Address of principal executive offices)
Issuer ’s telephone number:
Securities registered pursuant to Section 12(b) of the Act: Not applicable.
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Not applicable. |
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of Exchange Act). Yes ☐
No
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
| Common Stock, $0.00001 par value | Common Shares |
| (Class) | (Outstanding at August 15, 2024) |
GBT TECHNOLOGIES INC.
TABLE OF CONTENTS
1
Item 1: Condensed consolidated financial statements
| GBT TECHNOLOGIES INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| ASSETS | June
30, 2024 | December
31, 2023 | ||||||
| (Unaudited) | (Audited) | |||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Note receivable | ||||||||
| Marketable securities | ||||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts Payable and accrued expenses - related party | ||||||||
| Accrued settlement | ||||||||
| Convertible
notes payable, current, net of discount of $ | ||||||||
| Convertible
notes payable, related party, net of discount of $ | ||||||||
| Notes
payable, current, net of original issue discount of $ | ||||||||
| Notes payable, related party | ||||||||
| Derivative liability | ||||||||
| Total current liabilities | ||||||||
| Non-Current Liabilities: | ||||||||
| Note payable,
noncurrent, net of discount of $ | ||||||||
| Total noncurrent liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders' Deficit: | ||||||||
| Series B Preferred stock, $ par value; shares authorized; and shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively | ||||||||
| Series C Preferred stock, $ par value; shares authorized; and shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively | ||||||||
| Series H Preferred stock, $ par value ($500 stated value); shares authorized; and shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively | ||||||||
| Series I Preferred stock, $ par value ($350 stated value); shares authorized; and shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively | ||||||||
| Treasury stock, at cost; shares at June 30, 2024 and December 31, 2023, respectively | ( | ) | ( | ) | ||||
| Shares to be cancelled | ( | ) | ( | ) | ||||
| Stock loan receivable | ( | ) | ( | ) | ||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Non-Controlling Interest | ( | ) | ( | ) | ||||
| Total stockholders' deficit attributable to GBT Technologies, Inc. | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||
The accompanying footnotes are an integral part of the unaudited condensed consolidated financial statements.
2
GBT TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited/As Restated)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | $ | $ | $ | $ | ||||||||||||
| Marketing expenses | ||||||||||||||||
| Professional expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Amortization of debt discount | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Interest expense and financing costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on debt extinguishment | ||||||||||||||||
| Change in fair value of marketable securities | ( | ) | ( | ) | ||||||||||||
| Other income - related party licensing income | ||||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ||||||||||||||||
| Income (loss) from continuing operations | ( | ) | ( | ) | ||||||||||||
| Discontinued operations: | ||||||||||||||||
| Gain/(Loss) from discontinued operations | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Less: net (loss) income attributable to the noncontrolling interest | ( | ) | ( | ) | ( | ) | ||||||||||
| Net income (loss) attributable to GTB Technologies Inc. | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Net loss per share (basic and diluted): | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Diluted | ( | ) | ( | ) | ||||||||||||
The accompanying footnotes are an integral part of the unaudited condensed consolidated financial statements.
*The following unaudited balances were updated to reflect the discontinued operations of Mahaser Ltd.
The accompanying footnotes are an integral part of the unaudited condensed consolidated financial statements.
3
| GBT TECHNOLOGIES INC. |
| CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT |
| (Unaudited/As Restated*) |
| Series B Convertible Preferred Stock | Series C Convertible Preferred Stock | Series H Convertible Preferred Stock | Series I Convertible Preferred Stock | Common Stock | Treasury Stock | Share to be Cancelled | Stock Loan | Additional Paid-in | Accumulated | Noncontrolling | Total Stockholders' | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Receivable | Capital | Deficit | Interest | Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversions | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tokenize investment reclassification | — | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| VisionWave investment reclassification | — | — | — | — | — | — | — | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series B Convertible Preferred Stock | Series C Convertible Preferred Stock | Series H Convertible Preferred Stock | Series I Convertible Preferred Stock | Common Stock | Treasury Stock | Share to be Cancelled | Stock Loan | Additional Paid-in | Accumulated | Noncontrolling | Total Stockholders' | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Receivable | Capital | Deficit | Interest | Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversions | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for Service | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversions | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of derivative liability due to conversions | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
4
GBT TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net Income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of debt discount | ||||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Excess of debt discount and financing costs | ||||||||
| Shares issued for services | ||||||||
| Change in fair value of market equity security | ||||||||
| Gain on debt extinguishment | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Account receivable | ( | ) | ||||||
| Other receivable | ||||||||
| Prepaid | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Unearned revenue | ( | ) | ||||||
| Contract liabilities | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accounts payable and accrued expenses - RP | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Issuance of convertible notes | ||||||||
| Repayments to note payables | ( | ) | ||||||
| Repayments to related party | ( | ) | ||||||
| Repayment of Convertible note | ( | ) | ||||||
| Proceeds from related party | ||||||||
| Issuance of notes payable | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net changes in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Supplemental non-cash investing and financing activities | ||||||||
| Reduction in derivative liability due to conversion | $ | $ | ||||||
| Shares issued for conversion of convertible debt | $ | $ | ||||||
| Debt discount related to convertible debt | $ | $ | ||||||
| VisionWave investment reclassification | $ | $ | ||||||
| Tokenize investment reclassification | $ | $ | ||||||
*The following unaudited balances were updated to reflect the discontinued operations of Mahaser Ltd.
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
5
GBT Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2024 and 2023 (Unaudited)
Note 1 - Organization and Basis of Presentation
Organization and Line of Business
GBT Technologies Inc. (the “Company”, “GBT”, or “GTCH”) was incorporated on July 22, 2009 under the laws of the State of Nevada. The Company is targeting growing markets such as development of Internet of Things (IoT) and Artificial Intelligence (AI) enabled networking and tracking technologies, including wireless mesh network technology platform and fixed solutions, development of an intelligent human body vitals device, asset-tracking IoT, and wireless mesh networks. Effective August 5, 2019, the Company changed its name from Gopher Protocol Inc. to GBT Technologies Inc. The Company derived revenues from (i) the provision of IT consulting services; and (ii) from the licensing of its technology. (ii) from selling electronic products through e-commerce platforms.
On February 18, 2022 the Company, effective March 1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company shares revenues generated by Mahaser with respect to e-commerce sales through the online retail platform in the United States of America. Effective July 1, 2023, the Company agreed to terminate the RSA with Mahaser Ltd.
On July 20, 2023, the Company through its wholly owned subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize Corp (“GBT Tokenize” or “Tokenize”). GBT Tokenize has developed a vital device based on the Technology Portfolio that is ready for commercialization, as well as certain derivative technologies, which positioned GBT Tokenize to further develop or license certain code sources. On April 3, 2023, GBT Tokenize entered its first commercial transaction to date through the sale of the Avant-AI! technology that been developed by GBT Tokenize, based on the Technology Portfolio.
Effective as of March 20,
2024, Tokeniz, entered into a Patent Purchase Agreement with VisionWave Technologies Inc. (“VisionWave” or “VW”)
pursuant to which VisionWave agreed to acquire from Tokenize the entire right, title, and interest of certain patents and patent applications
providing an intellectual property basis for a machine learning driven technology that controls radio wave transmissions, analyzes their
reflections data, and constructs 2D/3D images of stationary and in motion objects (“VisionWave PPA”). The
Purchase Price for the asset is $
The unaudited condensed consolidated financial statements are prepared by the Company, pursuant to the rules and regulations of the SEC. The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented.
Basis of Presentation
The accompanying condensed consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
6
Stock Split
On October 26, 2021, the Company
effectuated a
In July 2, 2022 the Company filed a preliminary information statement to the stockholders of record (the “Record Date”) in connection with certain actions to be taken by the written consent by stockholders holding a majority of the voting stock of the Company, dated as of June 28, 2022.
| ● | To
amend the Company’s Articles of Incorporation, (the “Articles of Incorporation”) to increase the number of authorized
shares of common stock, par value $ per share (the “Common Stock”), of the Company from 2,000,000,000 shares to
|
| (i) authorize the Company’s Board of Directors to effect, in its sole discretion, a reverse stock split of the Common Stock in a ratio of up to |
On October 12, 2023, the Company amended its articles of incorporation to increase its authorized shares of common stock to (the “Increase Amendment”). The Increase Amendment was approved by the board of directors as well as the shareholders holding in excess of a majority of the issued and outstanding voting shares of the Company.
Note 2 – Going Concern
The accompanying condensed consolidated financial
statements have been prepared assuming the Company will continue as a going concern. The Company has an accumulated deficit
of $
The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through some private placement offerings of debt and equity securities. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These CFS do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
Note 3 – Discontinued Operations
On February 18, 2022, the Company, effective March
1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company
shares in revenues generated by Mahaser e-commerce sales through the online retail platform in the United States of America. Mahaser owns
an e-commerce platform as a store which is the legal, exclusive owner of Ravenholm Electronics. The Company will operate the e-commerce
platform and entitled to 95% for all revenue generated by and received by Mahaser from March 1, 2022 through December 31, 2022. The RSA
provides that the Company will be entitled to appoint a manager to Mahaser. As consideration, the Company will pay Mahaser $
The financial results of Mahaser Ltd. are present as loss from discontinued operations, net of income taxes on our consolidated income through June 30, 2023, when our deconsolidation occurred.
Note 4 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying condensed consolidated financial statements include valuation of derivatives and valuation allowance on deferred tax assets.
7
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries; the Company’s 50% owned subsidiaries: GBT Tokenize Corp, which in turn own 55% of Visionwave Technologies, Inc.; and GBT BitSpeed Corp. (currently inactive) and , Gopher Protocol Costa Rica Sociedad De Responsabilidad Limitada (currently inactive), a wholly owned subsidiary, AltCorp Trading LLC, a Costa Rica company (“AltCorp” currently inactive) and Greenwich International Holdings, a Costa Rica corporation (“Greenwich” currently inactive). All significant intercompany transactions and balances were eliminated.
For entities determined to be VIEs, an evaluation is required to determine whether the Company is the primary beneficiary. The Company evaluates its economic interests in the entity specifically determining if the Company has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance (“the power”) and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (“the benefits”). When making the determination whether the benefits received from an entity are significant, the Company considers the total economics of the entity, and analyzes whether the Company’s share of the economics is significant. The Company utilizes qualitative factors, and, where applicable, quantitative factors, while performing the analysis. In addition, the Company’s variable interests in Mahaser obligate the Company to absorb deficits and provide it with the right to receive benefits that could potentially be significant to Mahaser. As a result of this analysis, the Company concluded it is the primary beneficiary of Mahaser and therefore consolidates the balance sheets, results of operations and cash flows of Mahaser. The Company performs a qualitative assessment of Mahaser on an ongoing basis to determine if it continues to be the primary beneficiary.
Effective July 1, 2023, the Company terminated its joint venture revenue sharing (“Termination Agreement”) with Mahaser LTD (“Mahaser”). Until June 30, 2023, the Company’s variable interests in Mahaser obligate the Company to absorb deficits and provide it with the right to receive benefits that could potentially be significant to Mahaser. As a result of this analysis, the Company concluded it is the primary beneficiary of Mahaser and therefore consolidates the balance sheets, results of operations and cash flows of Mahaser until June 30, 2023. The Company performs a qualitative assessment of Mahaser on an ongoing basis to determine if it continues to be the primary beneficiary. Per the Termination Agreement, the Company has no access to Mahaser and ceased consolidated Mahaser as it does not comply with the condition in the qualitative assess, and as such this CFS does not include Mahaser operations for the period ended June 30, 2024.
Cash Equivalents
For the purpose of the statement of cash flows, cash
equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months
or less. As of June 30, 2024 and December 31, 2023, the Company did
Marketable Securities
The Company accounts for investment securities in accordance with ASC Topic 321, Investments – equity securities. Marketable equity securities are reported at FV based on quotations available on securities exchanges with any unrealized gain or loss being reported as a component of other income (expense) on the statement of operations. The portion of marketable equity security expected to be sold within 12 months of the balance sheet date is reported as a current asset. These publicly traded equity securities are valued using quoted prices and are included in Level 1.
Derivative Financial Instruments
The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its FV and is then re-valued at each reporting date, with changes in the FV reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of June 30, 2024 and December 31, 2023, the Company’s only derivative financial instrument was an embedded conversion feature associated with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage of the Company’s stock price at the date of conversion.
8
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their FV due to their short maturities.
FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the FV of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines FV, and establishes a three-level valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. | |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
| ● | Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the FV measurement. |
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.
For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as a financial instrument, and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
The Company uses Level 2 inputs for its valuation methodology for derivative liabilities as their FV were determined by using the Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect FV at each period end, with any increase or decrease in the FV being recorded in results of operations as adjustments to FV of derivatives.
At June 30, 2024 and December 31, 2023, the Company identified the following liabilities that are required to be presented on the balance sheet at FV:
| Fair Value | Fair Value Measurements at | ||||||||||||||
| As of | June 30, 2024 | ||||||||||||||
| Description | June 30, 2024 | Using Fair Value Hierarchy | |||||||||||||
| Level 1 | Level 2 | Level 3 | |||||||||||||
| Conversion feature on convertible notes | $ | $ | $ | $ | |||||||||||
| Fair Value | Fair Value Measurements at | ||||||||||||||
| As of | December 31, 2023 | ||||||||||||||
| Description | December 31, 2023 | Using Fair Value Hierarchy | |||||||||||||
| Level 1 | Level 2 | Level 3 | |||||||||||||
| Conversion feature on convertible notes | $ | $ | $ | $ | |||||||||||
Treasury Stock
Treasury stock is recorded at cost. The re-issuance of treasury shares is accounted for on a first in, first-out basis and any difference between the cost of treasury shares and the re-issuance proceeds are charged or credited to additional paid-in capital. The Company has 8 shares as treasury shares from acquisitions that commenced in 2011.
9
Reclassification
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
Effective July 1, 2023, the Company terminated its joint venture revenue sharing (“Termination Agreement”) with Mahaser LTD (“Mahaser”). Until June 30, 2023, the Company’s variable interests in Mahaser obligate the Company to absorb deficits and provide it with the right to receive benefits that could potentially be significant to Mahaser. The Company evaluated for the period ended on June 30, 2023, whether it has a variable interest in Mahaser, whether Mahaser is a VIE and whether the Company has a controlling financial interest in Mahaser. The Company concluded that it has variable interests in Mahaser on the basis of GBT has 100% control over the JV/revenue sharing, and as such should consolidate the JV into its books and records as it assigned 100% financial responsibility. Mahaser’s equity at risk, as defined by GAAP, is considered to be insufficient to finance its activities without additional support, and, therefore, Mahaser is considered a VIE. As termination Agreement took place during the reporting period, the financial been classified to disclose this operation as discontinued operation.
Revenue Recognition
Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on January 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. The Company had no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying condensed consolidated financial statements for the cumulative impact of applying this new standard. The Company made no adjustments to its previously reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.
Revenue from providing IT consulting services are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements:
| ● | executed contracts with the Company’s customers that it believes are legally enforceable; | |
| ● | identification of performance obligations in the respective contract; | |
| ● | determination of the transaction price for each performance obligation in the respective contract; | |
| ● | allocation the transaction price to each performance obligation; and | |
| ● | recognition of revenue only when the Company satisfies each performance obligation. |
These five elements, as applied to each of the Company’s IT revenue category, is summarized below:
| ● | IT consulting services - revenue is recorded on a monthly basis as services are provided. |
These five elements, as applied to each of the Company’s license revenue category, is summarize below:
| ● | License services – the one-time related party licensing income recorded as other income upon agreement is executed and services are provided and recognized over the term of five years. |
E-Commerce sales – (discontinued during 2023)
| ● | Identify the contract(s) with a customer. ASC 606 defines a contract as “an agreement between two or more parties that creates enforceable rights and obligations”. Since this is an e-commerce sale on the Amazon of eBay websites, the Company just followed the general terms on Amazon or eBay websites and the customer entered into a contract with the Company based on the product listed on the Amazon or eBay websites; |
10
Identify the performance obligations in the contract. According to the contract, the Company is responsible for operation exclusively. The Company is entitled to all revenue which is being paid by Amazon or eBay into a designated bank account and the Company is responsible for all product acquisitions as well as shipments. The only performance obligations were the electronic products that were listed on Amazon or eBay websites and the Company determined each order is one single obligation;
Determine the transaction price. The transaction price set to be the listed price on the Amazon or eBay websites;
Allocation the transaction price to the performance obligations in the contract; and
Recognize revenue when the Company satisfies a performance obligation. Sales are being recognized upon shipment.
Variable Interest Entity
On February 18, 2022, the Company, effective March
1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company
shares in revenues generated by Mahaser e-commerce sales through the online retail platform in the United States of America. Mahaser owns
an e-commerce platform as a store which is the legal, exclusive owner of Ravenholm Electronics. The Company will operate the e-commerce
platform and entitled to 95% for all revenue generated by and received by Mahaser from March 1, 2022 through December 31, 2022. The RSA
provides that the Company will be entitled to appoint a manager to Mahaser. As consideration, the Company will pay Mahaser $
On March 31, 2022, the parties entered into Amendment No. 2 to the RSA, where Mahaser agreed to pay the Company 100% per year for all revenue generated by and received by seller from the sales by Amazon within the United States of America as follows from March 1, 2022 through December 31, 2022. The Company will be responsible for 100% of the cost of goods sold as well. In addition, the Company is entitled to earn 100% revenues and cost of goods sold of the period from February 1, 2022 to February 28, 2022. On January 1, 2023 the company extended their partnership to December 31, 2023. Effective July 1, 2023, the Company agreed to terminate the RSA with Mahaser Ltd. The period ended on June 30, 2024 and year ended December 31, 2023 does not include the result of operation by Mahaser, as it ceases being VIE.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented and its current on all its tax filings federal and state until 2022 inclusive.
Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Due to the net income incurred potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented. The following potentially-dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.
11
| June 30, 2024 |
December 31, 2023 | |||||||
| Series B preferred stock | ||||||||
| Series C preferred stock | ||||||||
| Series H preferred stock | ||||||||
| Series I preferred stock | ||||||||
| Warrants | ||||||||
| Convertible notes | ||||||||
| Total | ||||||||
Management’s Evaluation of Subsequent Events
The Company evaluates events that have occurred after the balance sheet date of June 30, 2024, through the date which the condensed consolidated financial statements are issued. Based upon the review, other than described in Note 18 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company adopted this ASU on the consolidated financial statements in the year ended December 31, 2021. The adoption had no material impact on the consolidated financial statements for the period ended June 30, 2024 and year ended December 31, 2023.
On April 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”) to clarify the accounting by issuers for modifications or exchanges of equity-classified warrants. The new ASU is available here and effective for all entities in fiscal years starting after December 15, 2021. Early adoption is permitted. The Company adopted this ASU on the consolidated financial statements in the year ended December 31, 2021. The adoption had no material impact on the consolidated financial statements for the period ended June 30, 2024 and year ended December 31, 2023.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying condensed consolidated financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
Note 5 – Marketable Securities
| June 30, 2024 |
December 31, 2023 | |||||||
| Marketable Securities from AVAI. | $ | $ | ||||||
| Marketable Securities from MetAlert Inc. | ||||||||
| Total Fair Value of Marketable Securities | $ | $ | ||||||
12
Investment Avant – Trend Innovation Holdings, Inc- AVAI.
On April 3, 2023, GBT Tokenize Corp., a subsidiary
that is owned
In consideration of acquiring the System, TREN is required to issue to the Seller common shares of TREN (the “Shares”). The Shares will be restricted per Rule 144 as promulgated under the Securities Act of 1933, as amended (the “1933 Act”) and Seller agreed to a lock-up period of nine (9) months following closing (the “Lock Up Term”). In the event that TREN is unable to up-list to Nasdaq either through a business combination or otherwise prior to the expiration of the Lock Up Term, the Seller may request within three (3) business days of the expiration of the Lock-Up Term, that all transactions contemplated by the APA be unwound.
In addition, TREN, Seller and GBT entered into a license agreement regarding the System, granting the Seller and/or GBT a perpetual, irrevocable, non-exclusive, non-transferable license for using the System to be used in its own development, as in-house tool, where Seller or GBT may not sublicense its rights hereunder to any customer or client.
On July 18, 2023 TREN changed its name into: Avant Technologies, Inc and its ticker symbol on OTC Markets was changed into AVAI.
On June 4, 2024 Tokenize entered into Security and Exchange Agreement together with Subscription Agreement with VisionWave Technologies Inc. (“VW”), where Tokenize invested of the Shares for of VW, reducing the holding in the Shares to .
As of June 30, 2024 and December 31, 2023, the marketable
security including the investment via VW which been consolidated had a FV of $
MetAlert -prior name GTX Corp
On April 12, 2022, GBT Tokenize Corp (“GBT Tokenize”),
a Nevada corporation which the Company owns 50% of the outstanding shares of common stock, entered into a series of agreements with GTX
Corp (“GTX”) and various note holders of GTX pursuant to which Tokenize acquired a convertible promissory note of GTX of $
The GTX Notes bear 10% interest and 50% of the principal
may be converted into shares of common stock on a one-time basis at a conversion price of $
GTX changed its name into Metalert Inc. on or about September 20, 2022.
On September 30, 2022, GBT Tokenize, loaned MetAlert
Inc., a Nevada corporation (f/k/a GTX Corp.) (“MetAlert”) $
MetAlert designs, manufactures and sells various interrelated and complementary products and services in the wearable technology and IoMT (Internet of Medical Things) marketplace.
As of June 30, 2024 and December 31, 2023, the marketable
security had a FV of $
On or about January 31, 2023 GTB Tokenize Corp the
Company’s
As of June 30, 2024 and December
31, 2023, the notes had an outstanding balance of $
13
Note 6 - Stock Loan Receivable
On January 8, 2019, the Company
entered into a Stock Pledge Agreement with Latin American Exchange Latinex Casa de Cambio, S.A., a Costa Rica corporation (“Latinex”),
to provide that Latinex may maintain its required regulatory capital as required by various regulators. The Company has pledged restricted
shares of its common stock valued at $
Note 7 – Impaired Investment
Investment in GBT Technologies, S.A.
On June 17, 2019, the Company,
AltCorp Trading LLC, a Costa Rica company and a wholly-owned subsidiary of the Company (“AltCorp”), GBT Technologies, S.A.,
a Costa Rica company (“GBT-CR”) and Pablo Gonzalez, a shareholder’s representative of GBT-CR (“Gonzalez”),
entered into and closed an Exchange Agreement (the “GBT Exchange Agreement”) pursuant to which the parties exchanged certain
securities. In accordance with the Exchange Agreement, AltCorp acquired shares of GBT-CR representing 25% of its issued
and outstanding shares of common stock from Gonzalez for the issuance of shares of Series H Convertible Preferred Stock
of the Company and a Convertible Note in the principal amount of $
The Gopher Convertible Note bears interest of 6% and is payable at maturity on December 31, 2021. At the election of Gonzalez, the Gopher Convertible Note can be converted into a maximum of 20,000 shares of Series H Preferred Stock. Each share of Series H Preferred Stock is convertible, at the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($500 per share). The Series H Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series H Preferred Stock shall be entitled to one vote for each share of common stock that the Series H Preferred Stock may be convertible into. Upon conversion of the Gopher Convertible Note and the 20,000 shares of Series H Preferred Stock, Gonzalez would be entitled to less than 50% of the resulting outstanding shares of common stock of the Company following conversion in full and, as a result, such transaction is not considered a change of control.
On May 19, 2021, the Company entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of Note Balance Principal and Accrued Interest (the “Gonzalez Agreement”) with third party, GBT-CR, IGOR 1 Corp and Gonzalez. Pursuant to the Gonzalez Agreement, without any party admission of liability and to avoid litigation, the parties had agreed to (i) extend the GBT Convertible Note maturity date to December 31,2022, (ii) amend the GBT Convertible Note terms to include a beneficial ownership blocker of 4.99% and a modified conversion feature to the GBT Convertible Note with 15% discount to the market price during the 20 trading day period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT Convertible Note by Gonzalez to a third party.
GBT-CR is in the business of the strategic management of BPO (Business Process Outsourcing) digital communications processing for enterprises and startups, distributed ledger technology development, AI development and fintech software development and applications.
14
The Company accounted for its investment in GBT-CR using the equity method of accounting; however, in 2020, the Company owned less than 20% after GBT-CR issued additional shares to other investors therefore exercised no control over GBT-CR; therefore, this investment is currently accounted for under the cost method. Moreover, on March 19, 2020, California Governor Gavin Newsom issued a stay-at-home order to protect the health and well-being of all Californians and to establish consistency across the state in order to slow the spread of COVID-19. California was therefore under strict quarantine control and travel has been severely restricted, resulting in disruptions to work, communications, and access to files (due to limited access to facilities). The stay-at-home order was lifted in California only on January 25, 2021. The Company was unable to access or to contact GBT-CR on an on-going basis, and cannot get information about GBT-CR.
Investment in Joint Venture GBT Tokenize Corp
On March 6, 2020, the Company through Greenwich, entered into a Joint Venture and Territorial License Agreement (the “Tokenize Agreement”) with Tokenize-It, S.A. (“Tokenize”), which is owned by a Costa Rica Trust represented by Pablo Gonzalez (“Gonzalez”). Gonzalez also represents Gonzalez Costa Rica Trust, which holds a note in the principal amount of $10,000,000 and is also a shareholder of the Company. Under the Tokenize Agreement, the parties formed GBT Tokenize Corp., a Nevada corporation (“GBT Tokenize”). The purpose of GBT Tokenize is to develop, maintain and support source codes for its proprietary technologies including advanced mobile chip technologies, tracking, radio technologies, AI core engine, electronic design automation, mesh, games, data storage, networking, IT services, business process outsourcing development services, customer service, technical support and quality assurance for business, customizable and dedicated inbound and outbound calls solutions, as well as digital communications processing for enterprises and startups (“Technology Portfolio”), throughout the State of California. Upon generating any revenue from the Technology Portfolio, the Joint Venture will earn the first right of refusal for other territories. The Company pledged its 50% ownership in GBT Tokenize and its 100% ownership of Greenwich to Tokenize to secure its Technology Portfolio investment. The Company shall appoint two directors and Tokenize shall appoint one director of GBT Tokenize. Tokenize shall contribute the services and resources for the development of the Technology Portfolio to GBT Tokenize. The Company shall contribute shares of common stock of the Company (“GBT Shares”) to GBT Tokenize. Tokenize and the Company will each own 50% of GBT Tokenize. The shares were valued at $.
In addition, GBT Tokenize and Gonzalez entered into
a Consulting Agreement in which Gonzalez is engaged to provide services for $
Through this Joint Venture the parties commenced development
of an intelligent human vital signs’ device, which we currently refer to as the qTerm. The platform is an expansion of the existing
license agreement with GBT Tokenize Corp., which provided GBT Tokenize Corp. with an exclusive territory of California to develop certain
of the Company’s technology. As the nature of the platform cannot be restricted only to California, the Company’s joint venture
GBT Tokenize Corp. will be compensated with additional two hundred million shares of the Company to strengthen its funding, subject to
board approval. A provisional patent application for the qTerm Medical Device was filed on March 30, 2020 with the USPTO. The application
has been assigned serial number 63001564. The Joint Venture completed successfully the first prototype. There is no guarantee that the
Company will be successful in researching, developing or implementing this product into the market. In order to successfully implement
this concept, the Company will need to raise adequate capital to support its research and, if successfully researched, developed and granted
regulatory approval, the Company would need to enter into a strategic relationship with a third party that has experience in manufacturing,
selling and distributing this product. There is no guarantee that the Company will be successful in any or all of these critical steps.
On May 28, 2021, the parties agreed to amend the Tokenize Agreement to expand territory granted for the Technology Portfolio under the
license to GBT Tokenize to include the entire continental United States. The Company has further agreed to issue GBT Tokenize an additional
shares of common stock of the Company. The shares were valued at $
15
On July 20, 2023, the Company through its wholly owned inactive subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize Corp (“GBT Tokenize”).
The 2023 Tokenize Agreement restated and replaced
the 2022 Tokenize Agreement. Pursuant to the 2023 Tokenize Agreement, as a result of the contribution of the Technology Portfolio by Tokenize
and the subsequent contribution of services for the development of the Technology Portfolio by Tokenize and Magic, GBT Tokenize has been
able to continue in operation, which has benefited the Company despite its contribution of million shares of common stock valued at
approximately $
The Company pledged its 50% ownership in GBT Tokenize
and its
Effective as of March 20,
2024, Tokeniz, entered into a Patent Purchase Agreement with VisionWave Technologies Inc. (“VisionWave”) pursuant to which
VisionWave agreed to acquire from Tokenize the entire right, title, and interest of certain patents and patent applications providing
an intellectual property basis for a machine learning driven technology that controls radio wave transmissions, analyzes their reflections
data, and constructs 2D/3D images of stationary and in motion objects (“VisionWave PPA”). The
Purchase Price for the asset is $
Although the investment was impaired, the product
development is still ongoing. The carrying amount of this investment at June 30, 2024 and December 31, 2023, was $
Note 8 – Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at June 30, 2024 and December 31, 2023 consist of the following:
| 2024 | 2023 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Accrued interest | ||||||||
| Total | $ | $ | ||||||
Accounts payable consisted of approximately $
The decrease in accrued liabilities was due to the
reclassification of $
Accrued expenses consisted of approximately $
| 2024 | 2023 | |||||||
| Accounts payable - RP | $ | $ | ||||||
| Accrued interest - RP | ||||||||
| Other payables - RP | ||||||||
| Total | $ | $ | ||||||
16
Accounts payable – related parties consisted
of approximately $
Accrued interest – related parties consisted of unpaid interest from related parties note payable as of June 30, 2024.
Other payables consisted of approximately $
Note 9 – Convertible Notes Payable, Non-related Partied and Related Party
Convertible notes payable – nonrelated parties at June 30, 2024 and December 31, 2023 consist of the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Convertible note payable to GBT Technologies S.A | $ | $ | ||||||
| Convertible notes payable to 1800 | ||||||||
| Convertible notes payable to Glen | ||||||||
| Total convertible notes payable, non-related parties | ||||||||
| Unamortized debt discount | ( |
) | ( |
) | ||||
| Convertible notes payable – nonrelated parties | ||||||||
| Less current portion | ( |
) | ( |
) | ||||
| Convertible notes payable – nonrelated parties, long-term portion | $ | $ | ||||||
$10,000,000 for GBT Technologies S. A. acquisition
In accordance with the acquisition
of GBT-CR the Company issued a convertible note in the principal amount of $
On May 19, 2021, the Company,
Gonzalez, GBT-CR and IGOR 1 Corp entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of outstanding balance
plus accrued interest (the “Gonzalez Agreement”). Pursuant to the Gonzalez Agreement, without any party admission of liability
and to avoid litigation, the parties had agreed to (i) extend the GBT convertible note maturity date to
During the period ended June
30, 2024,
As of June 30, 2024, the
note had an outstanding balance of $
Paid Off Notes/Converted Notes
1800 Diagonal Lending LLC
Convertible Note - On March
1, 2023, the Company entered into a Securities Purchase Agreement with DL pursuant to which the Company issued to DL a Convertible Promissory
Note (the “DL Convertible Note”) of $
17
The outstanding principal
amount of the DL Convertible Note may not be converted prior to the period beginning on the date that is 180 days following the date the
DL Convertible Note is issued. Following the 180th day, DL may convert the DL Convertible Note into shares of the Company’s common
stock at a conversion price equal to
As of December 31, 2023,
the note had an outstanding balance of $
During the period ended June
30, 2024, 1800 Diagonal converted the remaining $
As of June 30, 2024, the
note had an outstanding balance of $
Outstanding Notes
Glen Eagle
The Company entered into a series of loan arrangements
with Glen Eagles Acquisition LP pursuant to which it received $
In order to include a convertible feature for the
$
During the period ended June
30, 2024, Glen Eagle converted $
As of June 30, 2024, the
consolidated convertible note had an outstanding balance of $
1800 Diagonal Lending LLC Convertible Note
$50,580 - On April 24, 2023, the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor
(“DL”) pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Note”) in the aggregate
principal amount of $
The outstanding principal amount of the DL Note may
not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day,
DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to
As of June 30, 2024, the
note had an outstanding balance of $
18
Convertible notes payable – related parties at June 30, 2024 and December 31, 2023 consist of the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Convertible note payable to Stanley Hills | ||||||||
| Unamortized debt discount | ||||||||
| Convertible notes payable, net, related party | ||||||||
| Less current portion | ( |
) | ( |
) | ||||
| Convertible notes payable, net, related party, long-term portion | $ | $ | ||||||
Stanley Hills LLC
The Company entered into
a series of loan agreements with Stanley Hills LLC (“Stanley”) pursuant to which it received more than $
During the period ended June
30, 2024, Stanley Hills converted $
As of June 30, 2024 and December
31, 2023 the principal balance of Stanley debt was $
Discounts on convertible notes
The Company recognized debt discount of $
A roll-forward of the convertible notes payable from December 31, 2023 to June 30, 2024 is below:
| Convertible notes payable, December 31, 2023, Net | $ | |||
| Conversion to common stock | ( |
) | ||
| Amortization of debt discounts | ||||
| Convertible notes payable, June 30, 2024, Net | $ |
19
Note 10 – Notes Payable, Non-related Parties and Related Party
Notes payable, non-related parties at June 30, 2024 and December 31, 2023 consist of the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| 1800 note | $ | $ | ||||||
| SBA loan | ||||||||
| Total notes payable | ||||||||
| Unamortized debt discount | ( |
) | ||||||
| Notes payable | ||||||||
| Less current portion | ( |
) | ( |
) | ||||
| Notes payable, long-term portion | $ | $ | ||||||
SBA Loan
On June 22, 2020, the Company received a loan from
the Small Business Administration under the Economic Injury Disaster Loan program related to the COVID-19 relief efforts. The loan bears
interest at
Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC
Straight Note – with
Convertible Feature - On March 1, 2023, the Company entered into a Securities Purchase Agreement, with 1800 Diagonal Lending LLC, an accredited
investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) of $
The outstanding principal
amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on the
DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to
During the three months ended March 31, 2024, the note has been fully repaid.
20
As of June 30, 2024 and December 31, 2023, the note had an outstanding
balance of $
Straight Note $47,208 - On April 24, 2023,
the Company entered into a Securities Purchase Agreement, with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant
to which the Company issued to DL a Promissory Note (the “DL Note”) in the aggregate principal amount of $
The outstanding principal amount of the DL Note may
not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert
the DL Note into shares of the Company’s common stock at a conversion price equal to
During the six months ended June 30, 2024, the note has been fully repaid.
As of June 30, 2024 and December
31, 2023, the note had an outstanding balance of $
Notes payable, related party at June 30, 2024 and December 31, 2023 consist of the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Alpha Eda Note payable | $ | $ | ||||||
| Total notes payable, related party | ||||||||
| Unamortized debt discount | ||||||||
| Notes payable, net, related party | ||||||||
| Less current portion | ( |
) | ( |
) | ||||
| Notes payable, net, related party, long-term portion | $ | $ | ||||||
Alpha Eda
On November 15, 2020, the Company issued a promissory
note to Alpha Eda, LLC (“Alpha”), a related party for $140,000. The note accrues interest at 10%, is unsecured and was
due on September 30, 2021. On March 31, 2023 Alpha and the Company extended the note maturity to December 31, 2023. The balance
of the note at June 30, 2024 and December 31, 2023 was $
Note 11 – Accrued Settlement
| June 30, 2024 |
December 31, 2023 | |||||||
| Accrued Settlement Payable | ||||||||
| Total | $ | $ | ||||||
21
In connection with a legal matter filed by the Investor
of the $
Note 12 - Derivative Liability
Certain of the convertible notes payable discussed in Note 10 have a conversion price that can be adjusted based on the Company’s stock price which results in the conversion feature being recorded as a derivative liability.
The FV of the derivative liability is recorded and shown separately under current liabilities. Changes in the FV of the derivative liability is recorded in the statement of operations under other income (expense).
The Company uses a weighted average Black-Scholes option pricing model with the following assumptions to measure the FV of derivative liability at June 30, 2024 and December 31, 2023:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Stock price | $ | $ | ||||||
| Risk free rate | – | % | – | % | ||||
| Volatility | – | % | – | % | ||||
| Conversion/ Exercise price | $ | $ | ||||||
| Dividend rate | % | % | ||||||
The following table represents the Company’s derivative liability activity for the period ended June 30, 2024:
| Derivative liability balance, December 31, 2023 | $ | |||
| Issuance of derivative liability during the period | ||||
| Fair value of beneficial conversion feature of debt converted | ( |
) | ||
| Change in derivative liability during the period | ( |
) | ||
| Derivative liability balance, June 30, 2024 | $ |
The significant decrease in the fair value of derivative liability was mainly due to the decrease in the stock prices from $ to $ from Q4 2023 to Q2 2024, as well as the conversions during the six months ended June 30, 2024, and the decrease in remaining convertible principal balances lower the derivative liabilities.
Note 13 - Stockholders’ Equity
Common Stock
In July 7, 2022 the Company filed a preliminary information statement to the stockholders of record (the “Record Date”) in connection with certain actions to be taken by the written consent by stockholders holding a majority of the voting stock of the Company, dated as of June 28, 2022.
| ● | To amend the Company’s Articles of Incorporation, (the “Articles of Incorporation”) to increase the number of authorized shares of common stock, par value $ |