ARGENTUM 47, INC. - Annual Report: 2015 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 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 000-54557
GLOBAL EQUITY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada | 27-3986073 | |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
X3 Jumeirah Bay, Office 3305, Jumeirah Lake Towers, Dubai, UAE
(Address of principal executive offices)
Registrant’s telephone number, including area code: +971 (0) 42767576 / + 1 321 200 0142
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common Stock, $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant: (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that he 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 Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit or post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S- K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] | |
Non-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 Act). Yes [ ] No [X]
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter (June 30, 2015) was approximately $187,682.
As of March 18, 2016, there were 776,165,973 shares of our common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None
TABLE OF CONTENTS
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CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Annual Report”), in particular the Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Item 7 herein (“MD&A”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give expectations or forecasts of future events. The reader can identify these forward-looking statements by the fact that they do not relate strictly to historical or current facts. They use words such as “believe(s),” “goal(s),” “target(s),” “estimate(s),” “anticipate(s),” “forecast(s),” “project(s),” plan(s),” “intend(s),” “expect(s),” “might,” may” and other words and terms of similar meaning in connection with a discussion of future operating, financial performance or financial condition. Forward-looking statements, in particular, include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends of operations and financial results.
Any or all forward-looking statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Annual Report. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance; actual results could differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the Company’s actual results and financial condition. The reader should consider the following list of general factors that could affect the Company’s future results and financial condition.
Among the general factors that could cause actual results and financial condition to differ materially from estimated results and financial condition are:
● | the success or failure of management’s efforts to implement their business strategy; | |
● | the ability of the Company to raise sufficient capital to meet operating requirements; | |
● | the uncertainty of consumer demand for our products and services; | |
● | the ability of the Company to compete with major established companies; | |
● | heightened competition, including, with respect to pricing, entry of new competitors and the development of new products by new and existing competitors; | |
● | absolute and relative performance of our products and services; | |
● | the effect of changing economic conditions; | |
● | the ability of the Company to attract and retain quality employees and management; | |
● | the current global recession and financial uncertainty; and | |
● | other risks which may be described in future filings with the U.S. Securities and Exchange Commission (“SEC”). |
No assurances can be given that the results contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. We assume no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this Annual Report. The reader is advised, however, to consult any further disclosures we make on related subjects in our filings with the SEC.
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BUSINESS DEVELOPMENT
BACKGROUND
Global Equity International Inc. (“Company” or “GEI”)) was incorporated on October 1, 2010, as a Nevada corporation, for the express purpose of acquiring Global Equity Partners Plc, a corporation formed under the laws of the Republic of Seychelles (“GEP”) on September 2, 2009. On August 22, 2014, GE Professionals DMCC was incorporated in Dubai as a fully owned subsidiary of Global Equity Partners Plc.
Global Equity Partners Plc and its subsidiary GE Professionals DMCC are Dubai based firms that provide consulting services, such as corporate restructuring, advice on management buy outs, management recruitment and development for corporate marketing, investor and public relations, regulatory compliance and introductions to financiers, to companies desiring to be listed on stock exchanges in various parts of the world.
Our authorized capital consists of 1,000,000,000 shares of common stock, $0.001 par value, and 50,000,000 shares of preferred stock, $0.001 par value.
On November 15, 2010, we entered into a Plan and Agreement of Reorganization (“Plan of Reorganization”) with GEP and its sole shareholder, Peter J. Smith, pursuant to which we would acquire 100% of the common stock of GEP. We consummated the Plan of Reorganization effective December 31, 2010, by issuing 20,000,000 shares of our common stock to Peter J. Smith, at which time GEP became our wholly owned subsidiary and Peter J. Smith was appointed as our President, Chief Executive Officer and Director.
As a result of our acquisition of GEP, we provide corporate advisory services to companies desiring to have their shares listed on stock exchanges or quoted on quotation bureaus in various parts of the world. We have offices in Dubai and London. We have affiliations with firms located in some of the world’s leading financial centers such as London, New York, Frankfurt and Dubai. These affiliations are informal and are comprised of personal relationships with groups of people or people with whom our Company or our management has done, or attempted to do, business in the past. We do not have any contractual arrangements, written or otherwise, with our affiliations.
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IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY
As a Company with less than $1 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (also known as the “JOBS Act”). As an emerging growth company, we are entitled to take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:
● | Only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; | |
● | Reduced disclosure about our executive compensation arrangements; | |
● | Not having to obtain non-binding advisory votes on executive compensation or golden parachute arrangements; and | |
● | Exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. |
We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1 billion in annual revenues, if we have more than $700 million in market value of our stock held by non-affiliates, or if we issue more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens in the future. We have irrevocably elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant Section 107(b) of the JOBS Act.
Peter Smith initially founded Global Equity Partners Plc. in 2009 to assist small to medium size businesses with management restructuring and corporate restructuring, in general, and also to obtain, if requested by its clients, access to capital markets via equity and debt financings.
Global Equity Partners Plc. and its subsidiary GE Professionals DMCC look for companies that require capital funding and ultimately a listing of their shares on a recognized stock exchange. The Company introduces these clients to private and institutional investors in our network of over 100 “financial introducers” around the world. These financial introducers are groups of people or institutions that are presently introducing new clients to us or who have introduced new clients to our management in the past. We do not have any contractual arrangements, written or otherwise, with these financial introducers.
Presently, Global Equity Partners Plc and its Dubai subsidiary, GE Professionals DMCC, are our only operating businesses. GEI´s present operations are limited to insuring compliance with regional, state and national securities regulatory agencies and organizations. In addition, GEI is charged with (i) handling our periodic reporting obligations under the Securities Exchange Act of 1934; (ii) managing our investor relations; and (iii) raising debt and equity capital necessary to fund our operations, and to enhance, and grow our business. GEI does not offer or conduct any consulting or advisory services, as such services are performed solely by our foreign subsidiary, GEP.
We currently offer the following services to our clients:
● | Corporate restructuring | |
● | Management buy outs | |
● | Management recruitment and employment placements | |
● | Investor and public relations | |
● | Regulatory compliance | |
● | Exchange listings | |
● | Introductions to financiers |
CORPORATE RESTRUCTURING SERVICES
We advise and assist our clients in determining the corporate structure that is most suitable to their business models. We recommend management changes where necessary. We also offer them corporate governance models customized to their specific organizations and desired exchange listings. We also review and analyze their balance sheets and capital structures and make recommendations on debt consolidations, equity exchanges for debt, proper capital structures and viability and timing of equity and debt offerings. We do not presently recommend and we do not intend in the future to recommend that our clients merge or be acquired by shell companies.
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MANAGEMENT BUY OUTS
We assist our clients in every aspect of management buyouts from corporate restructuring to debt financing and also introduce buyers and sellers to financiers for private equity placements.
MANAGEMENT RECRUITING AND EMPLOYMENT PLACEMENTS
We assist our clients with the recruitment of management and board members through our various contacts around the world. Management recruitment and retention is also an important part of our Corporate Restructuring Services and these services often overlap.
INVESTOR AND PUBLIC RELATIONS
Since our clients and future clients will likely desire to have their shares listed or continue to be listed on a stock exchange or quoted on one of the quotation bureaus, we will advise our clients on the necessary requirements for communicating with their equity holders and stakeholders, their customers and potential customers. We will assist our clients in this area by recommending third party financial professionals and investor relations and public relations organizations to provide them with such services.
REGULATORY COMPLIANCE
We have organized a cadre of third party securities attorneys and accountants to assist our clients with their compliance with the many reporting and other requirements of stock exchanges, quotation bureaus and securities regulatory agencies and organizations in the states and countries where their shares will be or are listed or traded.
EXCHANGE LISTINGS
We also assist our clients with the selection of stock exchanges that may be suitable to our clients. Various exchanges have listing requirements and standards that vary from one exchange to another. Typical listing requirements and standards relate to a number of things, such as pre-tax income, cash flows, revenue, net tangible assets, market value of a company’s listed securities, minimum trading prices of a company’s securities, minimum shareholders’ equity, operating history, number of shareholders, number of market makers, and corporate governance. We will try to identify appropriate exchanges for our clients based on the particular client’s operating history, pre-tax income, cash flow, revenue, net tangible assets, shareholder base and other factors described above.
We will assist our clients with retention of attorneys and accountants having experience with publicly held companies and stock exchanges in various countries. We will also assist our clients in locating market makers, investment bankers and broker-dealers to assist them with accessing capital markets.
INTRODUCTIONS TO FINANCIERS
After reviewing the business plans, prospects and problems that are unique to each of our clients, we will use our best efforts to introduce our clients to various third party financial resources around the world who may be able to assist them with their capital funding requirements.
As used throughout this Annual Report, references to “Global Equity International,” “GEI,” “Company,” “we,” “our,” “ours,” and “us” refer to Global Equity International, Inc. and our subsidiaries, unless the context otherwise requires. In addition, references to “financial statements” are to our consolidated financial statements contained herein, except as the context otherwise requires. References to “fiscal year” are to our fiscal year which ends on December 31 of each calendar year. Unless otherwise indicated, the terms “Common Stock,” “common stock” and “shares” refer to our shares of $0.001 par value, common stock.
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HISTORICAL BUSINESS TRANSACTED
BUSINESS TRANSACTED IN 2012
During 2012, we gained the following clients:
(1) REGIS CARDS LIMITED.
On May 25, 2012, we entered into a contract with Regis Card Limited (“Regis”), a “Pre-Paid” credit card company based in the U.S. and in the U.K.
We have contracted to provide Regis the following services:
● | Act as a corporate finance advisor to Regis; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market Regis, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with having its shares listed on the Dubai NASDAQ. |
(2) BTI / SCORPION PERFORMANCE INC.
On December 5, 2012, we entered into a contract with Scorpion Performance Inc. (“Scorpion”), a U.S. corporation based in Ocala, Florida. Scorpion manufactures precision metal performance engine components and also precision medical instruments.
We have contracted to provide Scorpion the following services:
● | Act as a corporate finance advisor to Scorpion; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market Scorpion, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with having its shares listed on the Dubai NASDAQ. |
(3) UNIVERSAL ENERGY SOLUTIONS BV
Universal Energy Solutions BV (“Universal”), a Netherlands green energy company, that desires to list its stock on the Dubai Nasdaq, but first requires our Company to source a Dubai sponsor that would agree to underwrite and sponsor the proposed public listing. We agreed to a fee of $10,000 and have been paid in full. We have subsequently sourced an appropriate Dubai sponsor, however the client decided not to pursue the public listing in the Dubai NASDAQ.
(4) INNOVEAS AG
Innoveas AG is a German company and a technology incubator that wishes to also list its shares on the Dubai Nasdaq, but also requires our Company to source a Dubai sponsor that would be in agreement to underwrite and sponsor the proposed public listing. We agreed to a fee of $10,000 and have been paid in full. We subsequently sourced an appropriate Dubai sponsor, but the client decided not to pursue the public listing in the Dubai NASDAQ.
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(5) ARABIAN NUBIAN RESOURCES LIMITED
Arabian Nubian Resources Limited (“Arabian”), a United Kingdom based company with mining contacts in North East Africa that wanted to list its shares on the Dubai Nasdaq, but required our Company to source a Dubai sponsor that would be in agreement to underwrite and sponsor the proposed public listing. We agreed to a fee of $10,000 and have been paid in full. We were unable to source a sponsor in Dubai for Arabian; hence, Arabian decided not to pursue the public listing in the Dubai NASDAQ.
At the date of this filing, only Regis Cards Limited is considered to be an ongoing client.
BUSINESS TRANSACTED IN 2013
During 2013, we gained the following clients:
(1) SCANDINAVIAN AGRITEX CO. LIMITED
Scandinavian Agritex Co. Limited (“SAC”) is a U.K. and Sri Lankan based company that is a green “Agriculture Technology and Textile” company whose business is situated in Sri-Lanka, Norway and the U.K. whose main purpose is to develop and rapidly expand the organic cotton industry in the country. SAC was founded by textile professionals, fashion brand owners, and finance people with significant international management experience. SAC has an extensive management team comprised of highly skilled and competent agronomists, farmers and textile professionals. SAC´s long term objective is to operate in the entire textile value chain, including cultivation of cotton, ginning, spinning, weaving, garment manufacture, fashion and retail, with the objective of retaining control and generating significant margins on each step of the chain. Furthermore, SAC intends to produce organic cotton fabrics to be used in the sustainable clothing lines of well-known fashion brands and retailers.
We have contracted to provide SAC with the following services:
● | Act as a corporate finance advisor to SAC; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market SAC, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with having its shares listed on the NASDAQ OTCQB. |
SAC agreed to pay us $255,000 and to date we have been paid $145,000. In addition, we have agreed that we will receive a 6% equity stake in SAC upon its initial public offering on the NASDAQ OTCQB.
At the date of this filing, Scandinavian Agritex Co. Limited is still considered to be an ongoing client.
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BUSINESS TRANSACTED IN 2014
During 2014, we gained the following eight clients:
(1) ATC Enterprises DMCC
ATC Enterprises DMCC (“ATC”) is a Dubai based company that has an innovative way to buy and sell diamonds. ATC DMCC is working with the Dubai Diamond Exchange to establish regular sales and tenders of rough cut diamonds in Dubai. The first of these was in January 2005. ATC has an extensive list of buyers from the UAE, Bombay, Surat, Ahmedabad, New York, Antwerp and the Far East, giving suppliers access to reliable and legitimate buyers throughout the world as well as the chance to trade in the unique and innovative environment in Dubai.
We have contracted to provide ATC with the following services:
● | Act as a corporate finance advisor to ATC; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
ATC agreed to pay us $30,000 for this initial ground work. A possible listing on a recognized stock exchange will be subject to a separate agreement.
(2) Authenta Trade Inc.
Authenta Trade Inc. (“Authenta”) is a Canadian company based in Calgary, Canada with offices in Singapore and Cyprus. Authenta is in the business of developing a high security digital currency exchange. Authenta was formed specifically to address security concerns in the market place, is currently developing software that will tighten security to new levels and will also bring technology to the marketplace in order to make transacting in digital currencies such as Bitcoin, much simpler.
We have contracted to provide Authenta with the following services:
● | Act as a corporate finance advisor to Authenta; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
Authenta agreed to pay us $60,000 for this initial ground work. A possible listing on a recognized stock exchange will be subject to a separate agreement.
(3) Duo World Inc.
Duo World Inc. (“Duo”), a Nevada corporation, is a software company with subsidiaries in Sri Lanka, India and Singapore. Duo is an information technology and software solutions company, focused on bringing value to its clients through every customer interaction. Duo´s business model allows it to deliver consistent, quality service, at a scale and in the geographies that meet its clients’ business needs. They leverage their breadth and depth of capabilities to help companies create quality customer experiences across multiple channels, while increasing revenue and reducing their cost to serve their customers.
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We have contracted to provide Duo with the following services:
● | Act as a corporate finance advisor to Duo; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with having its shares listed on the OTCQB. |
Duo agreed to pay us $250,000 and to date we have been paid $170,000. In addition, we have agreed that we will receive a 10% equity stake in Duo upon its initial public offering.
(4) Medinas Holdings BV
Medinas Holdings BV (“Medinas”) is a Netherlands company with subsidiaries in the Netherlands and also in the U.S. that is the sole proprietor and holder of an FDA approved cure for peritoneal cancer.
We have contracted to provide Medinas with the following services:
● | Act as a corporate finance advisor to Medinas; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with having its shares listed on the Dubai NASDAQ. |
Medinas agreed to pay us $465,000 and to date we have been paid $230,000. In addition, we have agreed that we will receive a 5% to 7% (depending on certain agreed upon milestones) equity stake in Medinas upon its initial public offering.
(5) Precious Cells International Limited
Precious Cells International Limited (“Precious”), a U.K. company, is based in London. Precious is a medical technology company founded in 2009, with a key focus on the development of clinical technologies in the innovation of adult stem cells, cord blood stem cells and regenerative medicine. Regenerative medicine consists of innovative medical therapies that will enable the body to repair, replace, restore and regenerate damaged or diseased cells, tissues and organs. These therapies are targeting the repair of damaged heart muscle following heart attacks, replacement of skin for burns victims, restoration of movement after spinal cord injury, regeneration of pancreatic tissue for insulin production in diabetics and provide new treatments for Parkinson’s and Alzheimer’s disease.
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We have contracted to provide Precious with the following services:
● | Act as a corporate finance advisor to Precious; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
Precious agreed to pay us $30,000 for this initial ground work. A possible listing on a recognized stock exchange will be subject to a separate agreement.
(6) Unii Limited
Unii Limited (“Unii”) is a U.K. based company and sole proprietor of the social media application “Fling – Message the World” that can be found in the Google Play Store and in Apple´s App Store and has grown virally to more than 3 million users at the date of this filing.
We have contracted to provide Unii with the following services:
● | Act as a corporate finance advisor to Unii; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
Unii agreed to pay us $60,000 for this initial ground work. Then in February of 2015, Unii agreed to a new contract whereby our Company would assist with a listing of their shares on a recognized exchange. The first part of this new agreement, $385,000, was paid to our Company in 2015.
(7) VT Hydrocarbon Holdings (Pte.) Ltd.
VT Hydrocarbon Holdings (Pte.) Ltd (“VTH”) is a Singapore based company whose ground operations are based in the Aqaba Special Economic Zone in Aqaba, Jordan. VTH is looking to acquire, operate, manage and build hydrocarbon storage farms in Aqaba and expand to repeat the formula in other parts of the world. VTH´s main business focus will be to provide Liquid Petroleum Gas storage as well as other wet fuel facilities.
We have contracted to provide VTH with the following services:
● | Act as a corporate finance advisor to VTH; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to potential sources of funding and once funding is sourced, assist with a potential IPO on the Dubai NASDAQ. |
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VTH agreed to pay us $20,000 for the initial ground work and a success fee for any funds that the company raises as a result of our introductions, of 1% (cash fee) and 1.5% (equity fee). A possible listing on a recognized stock exchange and a possible larger equity fee will be subject to a separate agreement.
(8) Your MD AS
Your MD AS (“Your MD”) is a Norwegian based company and sole proprietor of the medical diagnostic application “Your MD” that can be found in the Google Play Store and in Apple´s App Store. This service brings healthcare advice to those in areas where primary healthcare is needed most; whether that’s due to large expense, poor access, and poor quality primary health or for those who are unable to travel. Your MD is primarily focused on emerging markets.
We have contracted to provide Your MD with the following services:
● | Act as a corporate finance advisor to Your MD; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
Your MD agreed to pay us $25,000 for this initial ground work. A possible listing on a recognized stock exchange will be subject to a separate agreement.
At the date of this filing, all 2014 clients with the exception of Your MD AS and Precious Cells International Limited are considered to be ongoing clients.
OUR BUSINESS IN 2015
1) Advanced Imaging Projects LLC.
Advanced Imaging Projects LLC. (“AIP”), based in Florida, is a clinical stage specialty biopharmaceutical company that develops medicines for prevention, diagnosis and treatment of rare diseases in oncology, neurology and infectious diseases. Its mission is to make a meaningful difference to those impacted by maladies for which there are limited or no curative options. AIP has an industry-leading pipeline of promising new drugs that have the potential to treat Parkinson’s disease, Tuberculosis and Cancer. These products make fundamental contributions to medical progress and form an integral part of the companion diagnostic, individualized immunotherapy and orphan drug arsenal, among the fastest growing and most successful segments in the pharmaceutical sector.
We have contracted to provide AIP with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and |
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AIP agreed to pay us a cash success fee on any capital funding raised and a further success equity fee based on AIP’s issued and outstanding shares, post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
2) Energy Equity Resources (Norway) Limited.
Energy Equity Resources (Norway) Limited (“EER”) is an oil and gas company that is focused on the acquisition and development of concessions in proven hydrocarbon provinces in Nigeria.
We have contracted to provide EER with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and |
EER agreed to pay us a $30,000 cash fee and a 1.5% cash success fee on any capital funding raised and a further 2.5% success equity fee based on EER’s issued and outstanding shares, post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
3) Hoqool Petroleum.
Hoqool Petroleum (“HOQ”) is an independent oil and gas exploration and production company, incorporated in the Kingdom of Bahrain. Hoqool is an Arabic word that means fields and particularly oil and gas fields. Hoqool was established in 2010. The founders combine vast and deeply rooted leaders who are experienced, knowledgeable and well recognized, both locally and internationally, covering the upstream sector of the oil and gas with more than 175 years of experience.
We have contracted to provide HOQ with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth. |
HOQ agreed to pay us a 1.5% cash success fee on any capital funding raised and a further 10% success equity fee based on the company issued and outstanding shares post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
4) INSCX Exchange (Central Clearing) Limited.
INSCX Exchange (Central Clearing) Limited. (“Exchange” or “INSCX”) is the world’s first Nano-technology commodities exchange for the guaranteed physical delivery of Nano-Tech and other specialist materials, such as Polymers, Base Oils and Titanium Dioxide, more traditional materials where the exchange offers the only physical delivery hedging tool for producers and end users. INSCX offers the only global track and trade reporting system for engineered nanomaterials. The Exchange offers a highly effective, secure, regulatory and compliant framework for the emerging Nano-Tech industry. Commissioned by Lloyds (Bank) of London in 2010, INSCX is proving pivotal to enabling insurers to engage fully with upstream and downstream interest in this broad suite of materials.
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We have contracted to provide INSCX with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Assist with a possible listing of the company´s shares on a recognized stock exchange. |
INSCX agreed to pay us a $60,000 non-refundable cash fee and also a 5% cash success fee on any capital funding raised and a further 3% success equity fee based on INSCX’s issued and outstanding shares, post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
5) International FIM SRL.
International FIM SRL is a reputable Italian automotive parts manufacturer based in Bergamo (Milan, Italy). The company has a 17,000 square meter (153,000 square feet) factory located in Bergamo (Milan, Italy) just 100 miles north of Maranello (Modena) where Ferrari has its headquarters and employs over 180 people that manufacture automotive parts such as engine covers, front grills, wheel caps, emblems for the front hood, decorative emblems, airbag emblems, door emblems, instrument panels and chrome parts for the interior and exterior of cars along with many more items. The Company, previous called Lupini Targhe SPA, has been in operation since the 1960´s and has an impressive client list that varies from luxury brand names such as Lamborghini, Ferrari, Maserati, Porsche and Bentley to more common brand names such as General Motors, Ford, Alfa Romeo, Jaguar, Land Rover, BMW, Volkswagen, Fiat (Abarth), Audi, Skoda and many more.
We have contracted to provide FIM with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth. |
FIM agreed to pay us a 10% cash success fee on any capital funding raised and a further 10% success equity fee based on International FIM SRL’s issued and outstanding shares, post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
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6) Primesite Developments Limited.
Primesite Developments Limited and its subsidiaries (“PS”), is a commercial and residential property development group based in the North West of England (United Kingdom).
We have contracted to provide PS with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Assist with a listing of the company´s shares on the NASDAQ OTCQB. |
PS agreed to pay us a $300,000 cash fee and also a 5% equity fee. To date the company has paid us $150,000 and has issued us 5,606,521 common shares and a further 450,000 Series “A” preferred shares.
7) Quartal Financial Solutions AG.
Quartal Financial Solutions AG (“QFS”) a Zurich - Switzerland based Financial Technology Company. QFS is a market leading Financial Technology software company providing specialized financial solutions to the global financial and insurance industry. Their suite of products focuses on complex fee billing, revenue, commission, expense management and sophisticated high end reporting for global asset managers, banks, brokers, custodians, fund administrators, insurance companies, transfer agents and capital market firms.
We have contracted to provide QFS with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Assist with a listing of the company´s shares on the NASDAQ OTCQB. |
QFS agreed to pay us a $300,000 cash fee. QFS also agreed to pay us a 5% equity fee and a further 3% cash success fee based on the capital funding QFS raises. To date, QFS has paid us $150,000 and has issued us with 5% of QFS’ issued and outstanding shares.
8) TAM Mining Limited.
TAM Mining Limited is a North East African natural resources company.
We have contracted to provide TAM with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth. |
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TAM agreed to pay us a $60,000 non-refundable cash fee.
We have three distinct divisions (none of which will be treated as a segment for financial reporting purposes):
1. Introducers Network. We have developed and continue to develop a number of finance professionals, accountants, attorneys and financial advisers who will introduce us to their clients. We will review businesses introduced to us through these introducers and we will compensate them on sum “to be determined” based on the event that we are engaged to assist the companies they introduce to us.
2. Project Review. Our management team and advisors will carefully review and vet each business plan and opportunity submitted to us. Our management team and advisors will determine which services we can offer these clients and assess the potential propositions to best assist our clients in achieving their goals.
3. Placing. Working with our business associates in Dubai, Europe and the United States, we will use our best efforts to assist our clients with listings on stock exchanges in these cities and countries in order to maximize their exposure to capital markets and to access funding via debt and equity offerings.
FUTURE PLANS
MILESTONES FOR 2016:
Our specific plan of operations and milestones through March 2017 are as follows:
To date we have 15 clients under contract that we deem to be active and are either seeking a listing on a recognized stock exchange or seeking funding for acquisition and growth:
Client: | Sector: | ||
1 | Regis Card Group Limited | Prepaid cards and payment services | |
2 | Arrow Cars International Inc. | Long term car rental | |
3 | Medinas Holdings BV | Therapeutical stomach cancer treatment | |
4 | Duo World Inc. | Software development and integration | |
5 | VT Hydrocarbon Holdings (Pte.) | LNG Gas storage | |
6 | Authenta Trade | Bitcoin | |
7 | ATC Enterprises DMCC | Diamonds | |
8 | Unii Limited | Mobile Applications such as “Fling” | |
9 | Energy Equity Resources (Norway) Limited | Natural resources | |
10 | Scandinavian AgriTex Co. Limited | Cotton and clothing industry | |
11 | Tam Mining Limited | Natural resources | |
12 | Primesite Developments Limited | Residential and commercial Development | |
13 | International FIM SRL | Manufacturing of automotive car parts | |
14 | INSCX Exchange Limited | Nano-technology exchange | |
15 | Quartal Financial Solutions AG | Financial Technology |
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1) | DEVELOP THE INTRODUCER NETWORK FURTHER AND IN HOPES OF ATTRACTING NEW INTEREST FOR OUR SERVICES. |
We currently are relying on introductions to potential clients by the following firms in the Middle East, South East Asia, Europe and the US:
● | Certain registered investment houses and funds in London (United Kingdom) | |
● | An Austrian management consultancy firm based in Vienna (Austria) | |
● | Various investment banks based in Dubai (UAE) | |
● | Certain Private Banks based in Amsterdam (Holland), Luxembourg (Luxembourg) and Zurich in Switzerland | |
● | Various family offices in Dubai (UAE) | |
● | Various introducers to Capital based on the East and West coast of the US | |
● | Various introducers to Capital based in South East Asia | |
● | Yemon (Pvt.) Limited – An introducer of new business based in Sri Lanka | |
● | MEPEX – A Bahrain Oil and Gas exhibit with over 280 members | |
● | Sixfoursixfour Limited and the World Nano Foundation |
We intend to develop relationships with a further six “introducers” to potential new business for the Company within the next 12 months.
2) | NEW BUSINESS |
During next 12 months, we believe that we have the capacity to sign at least another 12 new clients in various sectors and located around the globe.
3) | DUBAI EXPANSION |
We will continue to establish a firm presence in Dubai, UAE where we are attracting clients, relationships and awareness. Our Dubai operation is currently a branch office of the Company allowing us a license to trade in the area. This branch office will continue to recruit new members of staff that will allow us to grow and become more efficient in Dubai.
4) | SOUTH EAST ASIAN EXPANSION |
We will continue to establish a firm presence in South East Asia where we are attracting clients, relationships and awareness.
5) | OPEN AN OFFICE IN THE US. |
Within the next 12 months, we plan to open an office on the east coast of the USA in order to substantially expand our network of introducers to new business and also professionals and consultants.
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6) | EXPAND OUR CONSULTANCY TO INCLUDE MORE MERGER AND ACQUISITION ACTIVITY. |
We intend to form relationships with merger and acquisition specialists during the next 12 months, which will hopefully enable us to:
● | Find potential merger and acquisition candidates. | |
● | Introduce our clients to brokers and investment bankers. | |
● | Introduce our clients to the appropriate professionals (attorneys and accountants) to assist them in a public offering or exchange listing. |
7) | DEVELOP IN HOUSE IT DEPARTMENT |
Commencing initially with one member we will start to develop a proprietary program allowing us to easily monitor a client’s development status and work in progress. We will also use this tool to manage our pipeline of clients and therefore it will become vital in our cash flow forecasting.
8) | EXPAND OUR HUMAN RESOURCES DEPARTMENT IN DUBAI – KINGSMAN JAMES. |
The Company created an in-house human resources department called “Kingsman James” (http://kingsmanjames.com/) with a view to be able to provide its existing clients and other new clients with the possibility of restructuring their companies management with seasoned professionals, if required. We intend to continue expanding this human resources department throughout the next 12 months.
9) | EXPAND OUR NETWORK OF CONTACTS WITHIN THE INVESTMENT COMMUNITY |
During the next 12 months, we intend to substantially expand our Middle Eastern, South East Asian and also our US networks in order to enable us to make introductions on a more institutional level. At present, we are being received with open arms by all of the financial communities with whom we have contact; hence, we have plans to host various hospitality events for our current clients, our key contacts and upper management of the Company.
10) | EXPAND OUR RANGE OF BUSINESS AND CONTACTS |
We intend to take our consultancy service outside of the Middle East and Europe and into Asia and Sri Lanka. We will expand on a “Commission Only” basis for the individuals or companies who take on our service to offer to their clients. Accountants, lawyers and finance professionals are the target market for overlaying our service into their existing client banks in return for a percentage of fees received. We also intend to add at least two new members to our administration team during the next 12 months.
11) | ROAD SHOWS |
We will continue working on different “Road shows” in Dubai, Europe, South East Asia and the US.
12) | FURTHER EXPAND OUR RANGE OF BUSINESS AND CONTACTS |
We intend to cement the relationships created. The target markets for attracting clients are: Thailand, Sri Lanka, China, Hong Kong and Singapore. To service the clients generated from these markets, we will spend time creating a network of service companies who we can utilize to assist us on a local basis. We will explore the possibilities of dual listings for our clients in Singapore to allow us a local market for any Asian clients we will attract and giving the Company a firm foothold in the Asian territory.
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COMPETITION
We face intense competition in every aspect of our business, and particularly from other firms which offer management, compliance and other consulting services to private and public companies. We would prefer to accept a relatively low cash component as our fee for management consulting and regulatory compliance services and take a greater portion of our fee in the form of restricted shares of our private clients’ common stock. We also face competition from a large number of consulting firms, investment banks, venture capitalists, merchant banks, financial advisors and other management consulting and regulatory compliance services firms similar to ours. Many of our competitors have greater financial and management resources and some have greater market recognition than we do.
REGULATORY REQUIREMENTS.
We are not required to obtain any special licenses, nor meet any special regulatory requirements before establishing our business, other than a simple business license. If new government regulations, laws, or licensing requirements are passed that would restrict or eliminate delivery of any of our intended products, then our business may suffer. Presently, to the best of our knowledge, no such regulations, laws, or licensing requirements exist or are likely to be implemented in the near future that would reasonably be expected to have a material impact on or sales, revenues, or income from our business operations.
We are not a broker-dealer. We are not an investment adviser or an investment company. We are not a hedge fund or a mutual fund or any similar type of fund. We are primarily an operating business that offers and performs corporate consultancy services.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS.
The Company’s common stock is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“1934 Act”). As a result of such registration, the Company is subject to Regulation 14A of the “1934 Act,” which regulates proxy solicitations. Section 14(a) requires all companies with securities registered pursuant to Section 12(g) thereof to comply with the rules and regulations of the Commission regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to stockholders of the Company at a special or annual meeting thereof or pursuant to a written consent will require the Company to provide its stockholders with the information outlined in Schedules 14A or 14C of Regulation 14; preliminary copies of this information must be submitted to the Commission at least 10 days prior to the date that definitive copies of this information are forwarded to stockholders.
The Company is also required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the Commission on a regular basis, and will be required to disclose certain events in a timely manner, (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on Form 8-K.
WE ARE SUBJECT TO THE REQUIREMENTS OF SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002. IF WE ARE UNABLE TO TIMELY COMPLY WITH SECTION 404 OR IF THE COSTS RELATED TO COMPLIANCE ARE SIGNIFICANT, OUR PROFITABILITY, STOCK PRICE AND RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED.
The Company is required to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002, which requires that we document and test our internal controls and certify that we are responsible for maintaining an adequate system of internal control procedures for the 2015 and 2016 fiscal years. We are currently evaluating our existing controls against the standards adopted by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). During the course of our ongoing evaluation and integration of the internal controls of our business, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review (see Item 9A, below for a discussion of our internal controls and procedures).
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We believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and operational changes caused by the need to comply with the requirement of Section 404 of the Sarbanes-Oxley Act could be significant. If the time and costs associated with such compliance exceed our current expectations, our results of operations and the future filings of our Company could be materially adversely affected.
DEPENDENCE ON KEY EMPLOYEES.
The Company is heavily dependent on the ability of our President, Peter Smith, our Chief Financial Officer, Enzo Taddei and our New Business Managing Director, Patrick V. Dolan. The loss of the services of Mr. Smith, Mr. Taddei or Mr. Dolan would seriously undermine our ability to carry out our business plan.
In the event of future growth in administration, marketing, manufacturing and customer support functions, the Company may have to increase the depth and experience of its management team by adding new members. The Company’s success will depend to a large degree upon the active participation of its key officers and employees, as well as the continued service of its key management personnel and its ability to identify, hire, and retain additional qualified personnel. There can be no assurance that the Company will be able to recruit such qualified personnel to enable it to conduct its proposed business successfully.
REPORTS TO SECURITY HOLDERS.
The public may view and obtain copies of the Company’s reports, as filed with the Securities and Exchange Commission, at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Information on the Public Reference Room is available by calling the SEC at 1-800-SEC-0330 1-800-SEC-0330 FREE. Additionally, copies of the Company’s reports are available and can be accessed and downloaded via the internet on the SEC’s internet site at http://www.sec.gov.
An investment in our Common Stock involves a high degree of risk. Prospective investors should carefully consider the following risk factors and the other information in this Annual Report and in our other filings with the SEC before investing in our Common Stock. Our business and results of operations could be seriously harmed by any of the following risks. You should carefully consider the risks described below, the other information in this Annual Report and the documents incorporated by reference herein when evaluating our Company and our business. If any of the following risks actually occurs, our business could be harmed. In such case, the trading price of our Common Stock could decline and investors could lose all or a part of the money paid for our Common Stock.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF THE FOLLOWING RISKS ACTUALLY MATERIALIZES, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS WOULD SUFFER AND OUR SHAREHOLDERS COULD LOSE ALL OR PART OF THEIR INVESTMENT IN OUR SHARES.
RISKS ASSOCIATED WITH OUR COMPANY
BECAUSE OUR AUDITORS HAVE ISSUED A GOING CONCERN OPINION, THERE IS SUBSTANTIAL UNCERTAINTY THAT WE WILL CONTINUE OPERATIONS IN THAT CASE INVESTORS COULD LOSE THEIR INVESTMENTS IN OUR COMMON STOCK.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such, we may have to cease operations and you could lose your investment.
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WE ARE AN “EMERGING GROWTH COMPANY” AND WE CANNOT BE CERTAIN IF WE WILL BE ABLE TO MAINTAIN SUCH STATUS OR IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 or “JOBS Act,” and we may adopt certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirement of holding a nonbinding advisory vote on executive and stockholder approval of any golden parachute payments not previously approved. We may remain an “emerging growth company” for up to five full fiscal years following our initial public offering. We would cease to be an emerging growth company, and, therefore, ineligible to rely on the above exemptions, if we have more than $1 billion in annual revenue in a fiscal year, if we issue more than $1 billion of non-convertible debt over a three-year period, or if we have more than $700 million in market value of our common stock held by non-affiliates as of June 30 in the fiscal year before the end of the five full fiscal years. Additionally, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result of our reduced disclosures, there may be less active trading in our common stock (assuming a market ever develops) and our stock price may be more volatile.
AS A RESULT OF OUR INTENSELY COMPETITIVE INDUSTRY, WE MAY NOT GAIN ENOUGH MARKET SHARE TO BE PROFITABLE.
The corporate consulting business is intensely competitive and due to our small size and limited resources, we may be at a competitive disadvantage, especially as a public company. There are several firms offering similar services. Many of our competitors have proven track records and substantial human and financial resources, as opposed to our Company which has limited human resources and little cash. Also, the financial burden of being a public company, which will cost us approximately $50,000 per year in auditing fees and legal fees to comply with our reporting obligations under the Securities Exchange Act of 1934 and compliance with the Sarbanes-Oxley Act of 2002, will strain our finances and stretch our human resources to the extent that we may have to price our Consultancy service fees higher than our non-publicly held competitors just to cover the costs of being a public company.
WE ARE VULNERABLE TO THE CURRENT ECONOMIC CRISIS WHICH MAY NEGATIVELY AFFECT OUR PROFITABILITY AND ABILITY TO CARRY OUT OUR BUSINESS PLAN.
We are currently in a severe worldwide economic recession. Runaway deficit spending by the United States government and other countries further exacerbates the United States and worldwide economic climate and may delay or possibly deepen the current recession. Currently, a lot of economic indicators such as rising commodity prices suggest higher inflation, dwindling consumer confidence and substantially higher taxes. Demand for the services we offer tends to decline during recessionary periods when disposable revenue is lower and may impact sales of our services. In addition, sudden disruptions in business conditions as a result of a terrorist attack similar to the events of September 11, 2001, including further attacks, retaliation and the threat of further attacks or retaliation, war, civil unrest in the Middle East, adverse weather conditions or other natural disasters, such as Hurricane Katrina, pandemic situations or large scale power outages can have a short term or, sometimes, long term impact on spending. The worldwide recession is placing severe constraints on the ability of all companies, particularly smaller ones, to raise capital, borrow money, and operate effectively and profitably and to plan for the future.
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BECAUSE OUR BUSINESS MODEL ANTICIPATES OUR RECEIVING EQUITY STAKES IN OUR CLIENTS, MOST OF WHOM WILL BE DEVELOPMENT STAGE COMPANIES, WE MAY NOT BE ABLE TO RESELL SUCH EQUITY AT SUITABLE PRICES, IF AT ALL, WHICH COULD MATERIALLY IMPACT OUR EARNINGS AND ABILITY TO REMAIN IN BUSINESS.
Our business model anticipates that we will receive, as partial compensation for our consulting services, equity stakes in our clients, many of whom will be development stage companies. We will have to value those equity stakes at the time we receive them. Investments in development stage companies are risky because many of such companies’ securities are illiquid, thinly traded (if at all) and the value of such securities will be subject to adjustments should the value of such securities decline, should such securities be delisted from an exchange or cease being quoted on a stock quotation medium or should such businesses fail, which could cause us to write-down or write-off the value of such securities and result in a negative impact to our earnings and possibly cause us to cease or curtail our operations.
WE MAY BE SUBJECT TO FURTHER GOVERNMENTAL REGULATION, INCLUDING THE INVESTMENT COMPANY ACT OF 1940, WHICH COULD ADVERSELY AFFECT OUR OPERATIONS.
As part of our business model, GEP accepts equity securities in our clients as partial compensation for our services. Prior to 2012, 40% or more of our income was derived from the receipt of equity securities and more than 40% of our assets were comprised of equity securities that we received in exchange for some of our services. In 2012, only 9.85% of our income was derived from the receipt of equity securities. As of December 31, 2013, 1.00% of our assets were comprised of equity securities. As of December 31, 2014, 3.69% of our assets were comprised of equity securities. As of December 31, 2015, 94.42% of our assets were comprised of equity securities.
Although we do not believe we are engaged in the business of investing, reinvesting or trading in securities, and we do not currently hold ourselves out to the public as being engaged in those activities, it is possible that we may be deemed to be an “inadvertent investment company” under section 3(a)(1)(C) of the Investment Company Act of 1940, as amended (“ICA”), if more than 40% of our future income and/or more than 40% of our assets are derived from “investment securities” (as defined in the ICA), and if we are deemed to be, or perceived to be, primarily engaged in the business of investing, reinvesting or trading in securities.
If we were deemed or found to be an investment company by the Securities and Exchange Commission or a court of law, then we would face dire consequences and a maze of additional regulatory obligations. For example, registered investment companies are subject to extensive, restrictive and potentially adverse regulation relating to, among other things, operating methods, management, capital structure, dividends and transactions with affiliates. If it were established that we are an unregistered investment company, there would be a risk, among other material adverse consequences, that we could become subject to monetary penalties or injunctive relief, or both, in an action by the SEC, that we would be unable to enforce contracts with third parties or that third parties with whom we have contracts could seek to obtain rescission of transactions with us undertaken during the period it was established that we were an unregistered investment company.
WE COULD BE SUBJECT TO THE INVESTMENT ADVISERS ACT OF 1940, WHICH WOULD BE DETRIMENTAL TO OUR BUSINESS.
Although we do not believe we are engaged in the investment advisory business and we do not hold ourselves out to be investment advisers, it is possible that the SEC could deem or find us to be an unregistered investment adviser due to the types of consulting services offered by us. If we were deemed or found to be an investment adviser by the Securities and Exchange Commission or a court of law, then we would face dire consequences and a maze of additional regulatory obligations. For example, registered investment advisers are subject to extensive, restrictive and potentially adverse regulation relating to, among other things, operating methods, fees, management, capital structure, dividends and transactions with affiliates. If it were established that we are an unregistered investment adviser, there would be a risk, among other material adverse consequences, that we could be become subject to monetary penalties or injunctive relief, or both, in an action by the SEC, that we would be unable to enforce contracts with third parties or that third parties with whom we have contracts could seek to obtain rescission of transactions with us undertaken during the period it was established that we were an unregistered investment adviser.
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OUR SHAREHOLDERS MAY BE DILUTED SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN FINANCING, FUND OUR OPERATIONS AND SATISFY OUR OBLIGATIONS THROUGH ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK.
We will likely have to issue additional shares of our Common Stock to fund our operations and to implement our plan of operation. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the remaining 173,834,027 authorized shares of our common stock net of the issued and reserved of 776,165,973 and 50,000,000 respectively. Future issuances of shares of our common stock will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value and that dilution may be material.
FINRA SALES PRACTICE REQUIREMENTS MAY LIMIT A STOCKHOLDER’S ABILITY TO BUY AND SELL OUR STOCK.
The FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker-dealers may be willing to make a market in our common stock, which may limit your ability to buy and sell our stock.
OUR ARTICLES OF INCORPORATION AUTHORIZE THE ISSUANCE OF PREFERRED STOCK.
Our Articles of Incorporation authorize the issuance of up to 50,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the common stock.
We have no preferred stock outstanding at this time.
THIS ANNUAL REPORT CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO US, OUR INDUSTRY AND TO OTHER BUSINESSES.
These forward-looking statements in this Annual Report are based on the beliefs of our management, as well as assumptions made by and information currently available to our management. When used in this Annual Report, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are subject to risks and uncertainties that may cause our actual results to differ materially from those contemplated in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
The Company does not own any property. Our executive offices are located at X3 Jumeirah Bay, Office 3305, Jumeirah Lake Towers, Dubai, U.A.E.; this office consists of 1,400 square feet of office space for which we pay a monthly rent of $2,675. We also have a satellite-serviced office located in London based in another office in Level 17 Dashwood House, 69 Old Broad Street, London EC2M 1QS, United Kingdom. Peter J. Smith, our President and Chief Executive Office, is based in Dubai, and Enzo Taddei, our Chief Financial Officer, is based between Europe and Dubai.
On October 9, 2013, the Company secured a two month loan for GBP 75,000 (equivalent to $120,420) and issued 10,000 restricted shares of common stock to the lender, The Able Foundation, on December 7, 2013, and also repaid 35,000 GBP (equivalent to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time, the Company compensated the lender with an additional 20,000 restricted shares of common stock in consideration for a five month extension on the loan. This stock compensation was issued to the lender also on December 12, 2013. The Company is currently in litigation, in the courts of Dubai, regarding the Able Foundation loan.
The plaintiff, the Able Foundation, is requesting a settlement of $411,272, which is the $226,616 currently owed, and an additional $184,656 accrued in 2015 as a provision for potential damages.
On, June 1, 2015, the Company (the defendant) retained the legal services of a Dubai based law firm called Al Safar & Partners. Currently, there is a judgment against the Company (the defendant) for the recovery of $411,272.
The Company’s Dubai lawyers, Al Safar & Partners, have subsequently appealed this judgement based on the fact that they believe from a legal stand point that:
1) | the Company (the defendant) has not been heard, which is a violation of the fundamental principle of law “Audi Alteram Partem”. |
2) | there is no legal existence of Global Equity Partners Plc. in Dubai as it is a Republic of Seychelles corporation; hence, the Courts of Dubai have no jurisdiction in the matter. |
According to the Dubai lawyers, the judgement issued against the Company (the defendant) by the Dubai First Instance Court bears no legality and void therefore the Plaintiff´s claim should be rejected in its entirety.
These legal proceedings and appeal are currently ongoing. The Company intends to vigorously defend the litigation. At this time, the Company cannot predict the outcome of the litigation.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
As of December 31, 2015, the Company’s Common Stock was quoted on the Over-the-Counter Bulletin Board under the symbol “GEQU.OB.” The market for the Company’s Common Stock is limited, volatile and sporadic and the price of the Company’s Common Stock could be subject to wide fluctuations in response to quarterly variations in operating results, news announcements, trading volume, sales of Common Stock by officers, directors and principal shareholders of the Company, general market trends, changes in the supply and demand for the Company’s shares, and other factors. The following table sets forth the high and low sales prices for each quarter relating to the Company’s Common Stock for the last two fiscal years. These quotations reflect inter-dealer prices without retail mark-up, markdown, or commissions, and may not reflect actual transactions.
Fiscal 2015 | High | Low | ||||||
First Quarter(1) | $ | 0.009 | $ | 0.002 | ||||
Second Quarter (1) | $ | 0.003 | $ | 0.001 | ||||
Third Quarter(1) | $ | 0.008 | $ | 0.002 | ||||
Fourth Quarter (1) | $ | 0.045 | $ | 0.01 |
Fiscal 2014 | High | Low | ||||||
First Quarter(1) | $ | 0.37 | $ | 0.08 | ||||
Second Quarter(1) | $ | 0.28 | $ | 0.05 | ||||
Third Quarter(1) | $ | 0.22 | $ | 0.14 | ||||
Fourth Quarter (1) | $ | 0.35 | $ | 0.008 |
(1) | This represents the closing bid information for the stock on the OTC Bulletin Board. The bid and ask quotations represent prices between dealers and do not include retail markup, markdown or commission. They do not represent actual transactions and have not been adjusted for stock dividends or splits. |
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
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Shareholders should be aware that, according to SEC Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence of these patterns or practices could increase the volatility of our share price.
Our management is aware of the abuses that have occurred historically in the penny stock market.
HOLDERS. As of the date of this filing, there were 82 record holders of the 776,165,973 shares of the Company’s issued and outstanding Common Stock.
DIVIDENDS. The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Company’s business.
RECENT ISSUANCES OF UNREGISTERED SECURITIES
SECURITIES ISSUED IN 2013
On February 15, 2013, the Company issued 100,000 common restricted shares at $.80 to Tricon Holdings Limited in exchange of $80,000 of marketing services rendered to the Company.
On March 12, 2013, the Company issued 75,000 common restricted shares at $1.10 to Tempest Holdings Limited in exchange of $82,500 of services rendered in the form of introductions of various new clients to the Company.
On April 5, 2013, the Company issued 150,000 common restricted shares at $.95 to Tricon Holdings Limited in exchange of $142,500 of marketing services rendered to the Company.
On April 5, 2013, the Company issued 500,000 common restricted shares at $.25 to Caro Capital Inc. in exchange of $125,000 of invest relations services rendered to the Company.
On April 15, 2013, the Company issued 25,000 common restricted shares at $.55 to Philip Brooks in exchange of $13,750 of services rendered to the Company.
On April 24, 2013, the Company issued 150,000 common restricted shares at $.29 to Robert Sullivan in exchange of $43,500 of marketing and radio advertisement services rendered to the Company.
On May 3, 2013, an investor, Piquerel Investment Limited, subscribed for 10,000 common restricted shares at $.60.
On May 17, 2013, the Company issued 40,000 common restricted shares at $.17 to Scott Suckling in exchange of $6,800 of services rendered in the form of introduction of a new client to the Company.
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On May 17, 2013, the Company issued 99,385 common restricted shares at $.17 to ME Biz Limited in exchange of $16,972 of services rendered in the form of introduction of a new client to the Company.
In October through December 2013, the Company issued 30,000 common restricted shares to the beneficiary of The Able Foundation (Mr. Robert Luke Hague) as an interest payment for a loan $120,420 signed on October 9, 2013. The stock issued was valued for a total cost of $3,900 at an average of $0.13.
From January, 2013 through December, 2013, the Company issued 120,000 common restricted shares to Tempest Holdings Limited in exchange of a twelve month consultancy agreement that began on January 1, 2013. The stock issue was valued at $50,400 at an average of $0.42 over the twelve month life of the contract.
On December 12, 2013 the Company issued 10,000 common restricted shares at $.12 to Zara V. Clark in exchange of $1,200 of services rendered to the Company.
On December 12, 2013 the Company issued 100,000 common restricted shares at $.12 to Michael Paul Duff in exchange of $12,000 of marketing services rendered to the Company in the United Kingdom.
On December 12, 2013 the Company issued 450,000 Series “A” preferred shares to the Company’s CFO (200,000), CEO (200,000) and one employee (50,000) having a fair value of $540,000 ($0.12 per share), based upon the fair value of the services rendered, which represented the best evidence of fair value.
SECURITIES ISSUED IN 2014
On March 17, 2014, the Company issued 295,567 shares of restricted common stock at $.04 per share to Asher Enterprises, Inc. upon conversion of debt valued at $12,000. The conversion was at a discount to market value of the common stock.
On April 1, 2014, the Company issued 501,149 shares of restricted common stock at $.22 per share to Asher Enterprises, Inc. upon conversion of debt valued at $109,819. The conversion was at a discount to market value of the common stock.
On April 22, 2014, the Company issued 165,000 shares of restricted common stock at $.05 per share to Robert Hasnain in exchange for $8,250 of services rendered to the Company. Common stock issued at market price on April 22, 2014.
On July 22, 2014, the Company issued 115,000 shares of restricted common stock at $.15 per share to Robert Hasnain in exchange for $17,250 of services rendered to the Company. Common stock issued at market price on July 22, 2014.
On July 22, 2014, the Company issued 50,000 shares of restricted common stock at $.15 per share to Susan Smith in exchange for $7,500 of services rendered to the Company. Common stock issued at market price on July 22, 2014.
On July 22, 2014, the Company issued 12,500 shares of restricted common stock at $.15 per share to Julian Ainsby in exchange for $1,875 of services rendered to the Company. Common stock issued at market price on July 22, 2014.
On July 22, 2014, the Company issued 276,000 shares of restricted common stock at $.15 per share to Colin Copeland in exchange for $41,400 of services rendered to the Company. Common stock issued at market price on July 22, 2014.
On August 4, 2014, the Company issued 200,000 shares of restricted common stock at $.15 per share to Martin E. Janis and Company, Inc. in exchange for $30,000 of services rendered to the Company. Common stock issued at market price on August 4, 2014.
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On September 19, 2014, the Company issued 500,000 shares of restricted common stock at $.16 per share to Patrick Dolan, the Company’s New Business Director, as a salary bonus.
On October 2, 2014, the Company issued 86,207 shares of restricted common stock at $.093 per share to Asher Enterprises, Inc. upon conversion of debt valued at $16,379. The conversion was at a discount to market value of the common stock.
On October 17, 2014, the Company issued 162,543 shares of restricted common stock at $.029 per share to Asher Enterprises, Inc. upon conversion of debt valued at $23,406. The conversion was at a discount to market value of the common stock.
On October 21, 2014, the Company issued 162,543 shares of restricted common stock at $.029 per share to Asher Enterprises, Inc. upon conversion of debt valued at $19,505. The conversion was at a discount to market value of the common stock.
October 27, 2014, the Company issued 162,543 shares of restricted common stock at $.029 per share to Asher Enterprises, Inc. upon conversion of debt valued at $18,530. The conversion was at a discount to market value of the common stock.
On November 6, 2014, the Company issued 18,498 shares of restricted common stock at $.054 per share to Adar Bay, LLC upon conversion of debt valued at $2,109. The conversion was at a discount to market value of the common stock.
On December 1, 2014, the Company issued 517,241 shares of restricted common stock at $.023 per share to Asher Enterprises, Inc. upon conversion of debt valued at $39,828. The conversion was at a discount to market value of the common stock.
On December 1, 2014, the Company issued 902,155 shares of restricted common stock at $.021 per share to Asher Enterprises, Inc. upon conversion of debt valued at $315,754. The conversion was at a discount to market value of the common stock.
On December 2, 2014, the Company issued 500,000 shares of restricted common stock at $.024 per share to Adar Bay, LLC upon conversion of debt valued at $42,200. The conversion was at a discount to market value of the common stock.
On December 16, 2014, the Company issued 600,000 shares of restricted common stock at $.013 per share to JMJ Financial upon conversion of debt valued at $7,500.
SECURITIES ISSUED IN 2015
On January 5, 2015, the Company issued 1,600,000 shares of restricted common stock valued at a fair value of $0.0065 per share or $10,400 to JMJ Financial upon conversion of $4,400 of debt.
On January 12, 2015, the Company issued 639,403 shares of restricted common stock valued at a fair value of $0.005 per share or $3,197 to LG Capital LLC upon conversion of $2,110 of debt and accrued interest.
On January 21, 2015, the Company issued 2,287,582 shares of restricted common stock valued at a fair value of $0.0057 per share or $13,039 to Adar Bay, LLC upon conversion of $7,000 of debt. The conversion was at a discount to market value of the common stock.
On January 21, 2015, the Company issued 1,056,986 shares of restricted common stock valued at a fair value of $0.0057 per share or $6,025 to LG Capital LLC upon conversion of $3,171 of debt and accrued interest.
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On January 21, 2015, the Company issued 1,680,000 shares of restricted common stock valued at a fair value of $0.0057 per share or $9,576 to JMJ Financial upon conversion of $4,200 of debt.
On February 10, 2015, the Company issued 1,809,000 shares of restricted common stock valued at a fair value of $0.0026 per share or $4,703 to JMJ Financial upon conversion of $1,809 of debt.
On February 12, 2015, the Company issued 1,636,958 shares of restricted common stock valued at a fair value of $0.0067 per share or $10,968 to LG Capital LLC upon conversion of $1,964 of debt and accrued interest.
On February 25, 2015, the Company issued 2,318,841 shares of restricted common stock valued at a fair value of $0.0027 per share or $6,261 to Adar Bay, LLC upon conversion of $3,200 of debt. The conversion was at a discount to market value of the common stock.
On February 26, 2015, the Company issued 1,800,000 shares of restricted common stock valued at a fair value of $0.0035 per share or $6,300 to JMJ Financial upon conversion of $1,800 of debt.
On March 12, 2015, the Company issued 2,391,304 shares of restricted common stock valued at a fair value of $0.003 per share or $7,174 to Adar Bay, LLC upon conversion of $3,300 of debt. The conversion was at a discount to market value of the common stock.
On March 13, 2015, the Company issued 1,808,000 shares of restricted common stock valued at a fair value of $0.0038 per share or $6,870 to JMJ Financial upon conversion of $1,808 of debt.
On March 16, 2015, the Company issued 2,532,051 shares of restricted common stock valued at a fair value of $0.004 per share or $10,128 to Adar Bay, LLC upon conversion of $3,950 of debt. The conversion was at a discount to market value of the common stock.
On March 17, 2015, the Company issued 1,669,013 shares of restricted common stock valued at a fair value of $0.0032 per share or $5,341 to LG Capital LLC upon conversion of $2,453 of debt and accrued interest.
On March 18, 2015, the Company issued 2,660,256 shares of restricted common stock valued at a fair value of $0.004 per share or $10,641 to Adar Bay, LLC upon conversion of $4,150 of debt. The conversion was at a discount to market value of the common stock.
On March 23, 2015, the Company issued 1,807,000 shares of restricted common stock valued at a fair value of $0.0024 per share or $4,337 to JMJ Financial upon conversion of $2,078 of debt.
On March 23, 2015, the Company issued 3,100,000 shares of restricted common stock valued at a fair value of $0.0024 per share or $7,440 to Adar Bay, LLC upon conversion of $4,650 debt. The conversion was at a discount to market value of the common stock.
On March 25, 2015, the Company issued 2,974,430 shares of restricted common stock valued at a fair value of $0.0042 per share or $12,493 to LG Capital LLC upon conversion of $4,283 of debt and accrued interest.
On March 26, 2015, the Company issued 3,466,667 shares of restricted common stock valued at a fair value of $0.0038 per share or $13,173 to Adar Bay, LLC upon conversion of $5,200 of debt. The conversion was at a discount to market value of the common stock.
On March 30, 2015, the Company issued 3,033,333 shares of restricted common stock valued at a fair value of $0.0029 per share or $8,797 to Adar Bay, LLC upon conversion of $4,550 of debt. The conversion was at a discount to market value of the common stock.
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On March 31, 2015, the Company issued 2,780,053 shares of restricted common stock valued at a fair value of $0.0026 per share or $7,228 to Adar Bay, LLC upon conversion of $4,170 of debt and accrued interest. The conversion was at a discount to market value of the common stock.
On April 14, 2015, the Company issued 3,958,000 shares of restricted common stock valued at a fair value of $0.0025 per share or $9,895 to JMJ Financial upon conversion of $3,166 of debt.
On April 15, 2015, the Company issued 3,923,747 shares of restricted common stock valued at a fair value of $0.0028 per share or 10,986 to LG Capital LLC upon conversion of $4,355 of debt and accrued interest.
On April 23, 2015, the Company issued 3,957,000 shares of restricted common stock valued at a fair value of $0.0023 per share or $9,101 to JMJ Financial upon conversion of $3,166 of debt.
On April 24, 2015, the Company issued 3,923,151 shares of restricted common stock valued at a fair value of $0.0033 per share or $12,946 to LG Capital LLC upon conversion of $3,884 of debt and accrued interest.
On May 5, 2015, the Company issued 3,925,458 shares of restricted common stock valued at a fair value of $0.0017 per share or $6,673 to LG Capital LLC upon conversion of $3,768 of debt and accrued interest.
On May 11, 2015, the Company issued 3,956,000 shares of restricted common stock valued at a fair value of $0.0024 per share or $9,494 to JMJ Financial upon conversion of $2,967 of debt.
On May 11, 2015, the Company issued 4,881,822 shares of restricted common stock valued at a fair value of $0.0024 per share or $11,716 to LG Capital LLC upon conversion of $4,687 of debt and accrued interest.
On May 15, 2015, the Company issued 5,380,000 shares of restricted common stock valued at a fair value of $0.0015 per share or $8,070 to JMJ Financial upon conversion of $3,766 of debt.
On May 28, 2015, the Company issued 5,375,000 shares of restricted common stock valued at a fair value of $0.0013 per share or $6,988 to JMJ Financial upon conversion of $2,956 of debt.
On June 3, 2015, the Company issued 5,379,000 shares of restricted common stock valued at a fair value of $0.0012 per share or $6,455 to JMJ Financial upon conversion of $2,690 of debt.
On June 4, 2015, the Company issued 5,866,316 shares of restricted common stock valued at a fair value of $0.0011 per share or $6,453 to LG Capital LLC upon conversion of $3,520 of debt and accrued interest.
On June 16, 2015, the Company issued 5,378,000 shares of restricted common stock valued at a fair value of $0.0010 per share or $5,378 to JMJ Financial upon conversion of $2,420 of debt.
On June 16, 2015, the Company issued 5,377,000 shares of restricted common stock valued at a fair value of $0.0010 per share or $5,377 to JMJ Financial upon conversion of $2,420 of debt.
On June 22, 2015, the Company issued 6,685,263 shares of restricted common stock valued at a fair value of $0.0012 per share or $8,022 to LG Capital LLC upon conversion of $3,811 of debt and accrued interest.
On June 30, 2015, the Company issued 7,289,947 shares of restricted common stock valued at a fair value of $0.0015 per share or $10,935 to LG Capital LLC upon conversion of $4,155 of debt and accrued interest.
On July 1, 2015, the Company issued 5,380,000 shares of restricted common stock valued at a fair value of $0.0015 per share or $8,070 to JMJ Financial upon conversion of $2,421 of debt.
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On July 8, 2015, the Company issued 126,451,613 shares of restricted common stock valued at a fair value of $0.0019 per share or $240,258 to our Chief Executive Officer, Peter Smith, upon conversion of $98,000 of debt.
On July 8, 2015, the Company issued 126,451,613 shares of restricted common stock valued at a fair value of $0.0019 per share to or $240,258 our Chief Financial Officer, Enzo Taddei, upon conversion of $98,000 of debt.
On July 9, 2015, the Company issued 20,500,000 shares of restricted common stock valued at a fair value of $0.0026 per share or $53,300 to JMJ Financial upon conversion of $9,225 of debt and accrued interest.
On July 10, 2015, the Company issued 12,161,491 shares of restricted common stock valued at a fair value of $0.0039 per share or $47,430 to LG Capital LLC upon conversion of $6,932 of debt and accrued interest.
On July 16, 2015, the Company issued 8,649,175 shares of restricted common stock valued at a fair value of $0.004 per share or $34,597 to LG Capital LLC upon conversion of $4,930 of debt and accrued interest.
On July 22, 2015, the Company issued 20,550,000 shares of restricted common stock valued at a fair value of $0.0054 per share or $110,970 to JMJ Financial upon conversion of $9,248 of accrued interest.
On August 6, 2015, the Company issued 7,619,129 shares of restricted common stock valued at a fair value of $0.0049 per share or $37,334 to JMJ Financial upon conversion of $5,333 of accrued interest.
On August 27, 2015, the Company issued 86,248,481 shares of restricted common stock valued at a fair value of $0.0064 per share or $551,990 to our Chief Executive Officer, Peter Smith, upon conversion of $217,131 of debt and accrued interest.
On August 27, 2015, the Company issued 42,127,492 shares of restricted common stock valued at a fair value of $0.0064 per share or $269,616 to our Chief Executive Officer, Peter Smith, upon conversion of $106,056 of accrued salary.
On August 27, 2015, the Company issued 69,076,922 shares of restricted common stock valued at a fair value of $0.0064 per share or $442,092 to our Chief Financial Officer, Enzo Taddei, upon conversion of $173,901 of accrued salary.
On August 27, 2015, the Company issued 25,638,914 shares of restricted common stock valued at a fair value of $0.0064 per share or $164,089 to our Chief Financial Officer, Enzo Taddei, upon conversion of $64,546 of debt and accrued interest.
On August 27, 2015, the Company issued 46,951,070 shares of restricted common stock valued at a fair value of $0.0064 per share or $300,487 to our New Business Development Managing Director, Patrick V. Dolan, upon conversion of $118,199 of accrued salary.
On September 9, 2015, the Company issued 5,500,000 shares of restricted common stock valued at a fair value of $0.014 per share or $77,000 to Patrick Hobbs, upon conversion of $55,000 of accrued salary and commissions.
On September 9, 2015, the Company issued 2,890,554 shares of restricted common stock valued at a fair value of $0.014 per share or $40,468 to Michael Paul Duff, upon conversion of $42,202 of services provided to the Company.
On September 10, 2015, the Company issued 10,749,000 shares of restricted common stock valued at a fair value of $0.0127 per share or $136,512 to Colin Copeland, upon conversion of $79,000 of accrued salary.
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On October 16, 2015, the Company issued 1,000,000 shares of restricted common stock valued at a fair value of $0.0419 per share or $41,900 to Charles Taylor, upon conversion of $40,000 of accrued salary.
On December 1, 2015, the Company issued 750,000 shares of restricted common stock valued at a fair value of $0.0233 per share or $17,475 to Moira Kelly, upon conversion of $30,000 of services provided to the Company.
On December 4, 2015, the Company issued 500,000 shares of restricted common stock valued at a fair value of $0.0233 per share or $11,650 to Proactive Capital Resources Group, upon conversion of $11,650 of services provided to the Company.
On December 4, 2015, the Company issued 892,790 shares of restricted common stock valued at a fair value of $0.0233 per share or $20,802 to Colin Copeland, upon conversion of $20,082 of accrued salary and expenses.
On December 10, 2015, the Company issued 1,500,000 shares of restricted common stock valued at a fair value of $0.0284 per share or $42,600 to Pilar Beatriz Tardon, upon conversion of $60,000 of services provided to the Company.
All of the foregoing stock was issued in reliance on the exemption from registration requirements of the 33 Act provided by Section 4.(a)(2) of the 33 Act and/or the exclusion from registration requirements of the 33 Act provided by Regulation S promulgated under the 33 Act.
ISSUER REPURCHASES OF EQUITY SECURITIES
None.
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
CAUTIONARY FORWARD - LOOKING STATEMENT
The following discussion and analysis of the results of operations and financial condition of Global Equity International, Inc. should be read in conjunction with our financial statements and related notes. References to “we,” “our,” or “us” in this section refers to the Company and its subsidiaries. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following:
● | the volatile and competitive nature of our industry, | |
● | the uncertainties surrounding the rapidly evolving markets in which we compete, | |
● | the success of marketing efforts by third parties, | |
● | the changing demands of customers, and | |
● | the arrangements with present and future customers and third parties. |
Should one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results of current and future operations may vary materially from those anticipated.
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For the years ended December 31, 2015 and 2014:
The Company had revenues amounting to $3,313,356 and $515,000, respectively, for the years ended December 31, 2015 and 2014.
December 31, 2015 | December 31, 2014 | Changes | ||||||||||
Revenue | $ | 3,313,356 | $ | 515,000 | $ | 2,798,356 | ||||||
$ | 3,313,356 | $ | 515,000 | $ | 2,798,356 |
The total revenue for the year ended December 31, 2015 amounted to $3,313,356. The breakdown of this amount was as follows:
a) | $865,500 in equity securities in a private company in exchange for services performed. The valuation was based on 3,460,000 common shares at $0.25 per share and 500,000 preferred shares at $0.001 per share. | |
b) | $675,450 was received in equity securities in another private company in exchange for services performed. The valuation was based on 4,500,000 common shares at $0.15 per share and 450,000 preferred shares at $0.001 per share. $829,891 (75% of $1,106,521) was also received in equity securities from this private company in exchange for services performed. The valuation was based on 1,106,521 common shares at $1 per share. Remaining $276,630 (25% of $1,106,521) was recognized as deferred revenue as at December 31, 2015. | |
c) | $262,015 was recognized as revenue from deferred revenue as we performed related services to the clients against payments received in prior years. | |
d) | $680,500 was received in cash for services performed to our new clients during the year ended December 31, 2015. |
The total revenue for the year ended December 31, 2014 amounted to $515,000. The breakdown of this amount was as follows:
a) | During the year ended December 31, 2014 the Company received $730,015 of cash fees from eleven clients for services to be rendered during the year 2014 and subsequent years. At December 31, 2014, the Company recognized a total of $515,000 as revenue of which $297,000 was deferred revenue from cash fees received in prior years. |
For the years ended December 31, 2015 and December 31, 2014, the Company had the following concentrations of revenues with customers:
Customer | December 31, 2015 | December 31, 2014 | ||||||
VTH | 0 | % | 3.88 | % | ||||
AUT | 0 | % | 11.65 | % | ||||
ATC | 0 | % | 5.83 | % | ||||
PCI | 0 | % | 5.83 | % | ||||
YMD | 0 | % | 4.85 | % | ||||
IOA | 0 | % | 4.85 | % | ||||
STV | 0 | % | 4.85 | % | ||||
DSI | 0 | % | 22.33 | % | ||||
SAC | 1.81 | % | 4.85 | % | ||||
MHB | 0.91 | % | 19.42 | % | ||||
UNI | 6.10 | % | 11.65 | % | ||||
DUO | 31.25 | % | 0 | % | ||||
TAM | 1.81 | % | 0 | % | ||||
EER | 0.91 | % | 0 | % | ||||
MGP | 1.81 | % | 0 | % | ||||
PDI | 49.96 | % | 0 | % | ||||
QFS | 0.38 | % | 0 | % | ||||
INSCX | 0.60 | % | 0 | % | ||||
ALP | 4.46 | % | 0 | % | ||||
100 | % | 100 | % |
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The total operating expenditures amounted to $1,870,214 and $1,391,743, respectively, for the years ended December 31, 2015 and 2014, respectively. The following table sets forth the Company’s operating expenditure analysis for both years:
December 31, 2015 | December 31, 2014 | Change | ||||||||||
General and administrative expenses | $ | 454,859 | $ | 314,095 | $ | 140,764 | ||||||
Salaries | 1,071,999 | 816,323 | 255,676 | |||||||||
Professional services | 332,105 | 254,953 | 77,152 | |||||||||
Depreciation | 11,251 | 4,372 | 6,879 | |||||||||
Impairment of Financial Assets | - | 2,000 | (2,000 | ) | ||||||||
Total operating expenses | $ | 1,870,214 | $ | 1.391,743 | $ | 478,471 |
Total operating expenses increased by $478,471 as we had more legal and professional fees to pay on behalf of new clients during the year ended December 31, 2015. We accrued $184,656 as provision for potential damages due to the ongoing litigation in the Dubai Courts. We also had three more employees during the year ended December 31, 2015, which was the reason for an increase in salaries expense.
The net income / (loss) from operations for the years ended December 31, 2015 and 2014 was $1,443,142 and $(876,743), respectively.
The Company´s other income and (expenses) for the years ended December 31, 2015 and 2014 was $(1,195,708) and $(1,345,386), respectively.
December 31, 2015 | December 31, 2014 | Change | ||||||||||
Interest expense | $ | (337,106 | ) | $ | (608,973 | ) | $ | 271,867 | ||||
Finance charges | (124,175 | ) | - | (124,175 | ) | |||||||
Amortization of debt discount | (355,253 | ) | (299,535 | ) | (55,718 | ) | ||||||
Loss on derivative liabilities | (407,482 | ) | (227,495 | ) | (179,987 | ) | ||||||
Loss on conversion of notes and other liabilities | (733,922 | ) | (369,949 | ) | (363,973 | ) | ||||||
Gain on settlement of debt | 660,578 | 138,834 | 521,744 | |||||||||
Gain on debt extinguishment of other liabilities | 116,921 | 22,486 | 94,435 | |||||||||
Bad debt expense | (13,345 | ) | - | (13,345 | ) | |||||||
Exchange rate loss | (1,924 | ) | (754 | ) | (1,170 | ) | ||||||
Total other income (expense) | $ | (1,195,708 | ) | $ | (1,345,386 | ) | $ | 149,678 |
Our total other income (expense) mainly include amounts related to convertible loan notes which were fully converted into our common stock during the year ended December 31, 2015. These note conversions caused an increase in amortization of debt discount and loss on conversion of notes. Loss on derivative liabilities also increased due to the change in fair values of the derivative liabilities at each conversion and reporting date. There was also a gain on debt extinguishment of other liabilities and gain on settlement of liabilities. Gain on debt extinguishment of other liabilities included extinguishment of stock payable balance amounting to $82,850 and $34,071 related to balances written back that company owed to different static creditors from a long time. Gain on settlement of debt included write back of excess amount of accrued interest and monitoring fee payable relating to Eden loan as per the new arrangement between the lender (Eden) and the Company. The interest expense decreased because we paid back loans in cash and all of the convertible notes were converted into common stock of the Company during the year ended December 31, 2015. Bad debt expense consisted of static receivable balances from three parties, which were deemed uncollectible, hence written off during the year ended December 31, 2015.
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The net income / (loss) for the years ended December 31, 2015 and 2014 amounted to $247,434 and $(2,222,129), respectively.
The Company´s Comprehensive income / (loss) for the years ended December 31, 2015 and 2014 amounted to $246,389 and $(2,221,084), respectively.
Comprehensive income / (loss): | 12/31/2015 | 12/31/2014 | ||||||
Gain on foreign currency translation | $ | (1,045 | ) | $ | 1,045 | |||
Net income / (loss) | 247,434 | (2,222,129 | ) | |||||
Comprehensive income / (loss) | $ | 246,389 | $ | (2,221,084 | ) |
At December 31, 2015 and December 31, 2014, the Company had 776,165,973 and 36,271,148 shares issued and outstanding, respectively, the weighted average number of common shares outstanding was 373,102,366 and 32,487,859 shares, respectively, hence, the earnings / (loss) per share at December 31, 2015 and 2014 was $0.001 and $(0.07), respectively.
BUSINESS DEVELOPMENT
RESULTS FOR THE YEAR ENDED DECEMBER 31, 2015
At the beginning of 2015, we already had contracts with 8 companies. During 2015, we gained the following eight new clients:
1) Advanced Imaging Projects LLC.
Advanced Imaging Projects LLC. (“AIP”) based in Florida is a clinical stage specialty biopharmaceutical company that develops medicines for prevention, diagnosis and treatment of rare diseases in oncology, neurology and infectious diseases. Its mission is to make a meaningful difference to those impacted by maladies for which there are limited or no curative options. The company has an industry-leading pipeline of promising new drugs that have the potential to treat Parkinson’s disease, Tuberculosis and Cancer. These products make fundamental contributions to medical progress and form an integral part of the companion diagnostic, individualized immunotherapy and orphan drug arsenal; among the fastest growing and most successful segments in the pharmaceutical sector.
We have contracted to provide AIP with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and |
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AIP agreed to pay us a 5% cash success fee on any capital funding raised and a further 8% success equity fee based on AIP’s issued and outstanding shares, post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
2) Energy Equity Resources (Norway) Limited.
Energy Equity Resources (Norway) Limited (“EER”) is an oil and gas company that is focused on the acquisition and development of concessions in proven hydrocarbon provinces in Nigeria.
We have contracted to provide EER with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and |
EER agreed to pay us a $30,000 cash fee and also a 1.5% cash success fee on any capital funding raised and a further 2.5% success equity fee based on EER’s issued and outstanding shares, post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
3) Hoqool Petroleum.
Hoqool Petroleum (“HOQ”) is an independent oil and gas exploration and production company, incorporated in the Kingdom of Bahrain. Hoqool is an Arabic word that means fields and particularly oil and gas fields. Hoqool was established in 2010. The founders combine vast and deeply rooted leaders who are experienced, knowledgeable and well recognized, both locally and internationally, covering the upstream sector of the oil and gas with more than 175 years of experience.
We have contracted to provide HOQ with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth. |
HOQ agreed to pay us a 1.5% cash success fee on any capital funding raised and a further 10% success equity fee based on HOQ’s issued and outstanding shares, post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
4) INSCX Exchange (Central Clearing) Limited.
INSCX Exchange (Central Clearing) Limited. (“INSCX”) is the world’s first Nano-technology commodities exchange for the guaranteed physical delivery of Nano-Tech and other specialist materials, such as Polymers, Base Oils and Titanium Dioxide, more traditional materials where the exchange offers the only physical delivery hedging tool for producers and end users. INSCX offers the only global track and trade reporting system for engineered nanomaterials. The Exchange offers a highly effective, secure, regulatory and compliant framework for the emerging Nano-Tech industry. Commissioned by Lloyds (Bank) of London in 2010, INSCX is proving pivotal to enabling insurers to engage fully with upstream and downstream interest in this broad suite of materials.
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We have contracted to provide INSCX with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Assist with a possible listing of the company´s shares on a recognized stock exchange. |
INSCX agreed to pay us a $60,000 non-refundable cash fee and also a 5% cash success fee on any capital funding raised and a further 3% success equity fee based on INSCX’s issued and outstanding shares, post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
5) International FIM SRL.
International FIM SRL is a reputable Italian automotive parts manufacturer based in Bergamo (Milan, Italy). The company has a 17,000 square meter (153,000 square feet) factory located in Bergamo (Milan, Italy) just 100 miles north of Maranello (Modena) where Ferrari has its headquarters and employs over 180 people that manufacture automotive parts such as engine covers, front grills, wheel caps, emblems for the front hood, decorative emblems, airbag emblems, door emblems, instrument panels and chrome parts for the interior and exterior of cars along with many more items. The Company, previous called Lupini Targhe SPA, has been in operations since the 1960´s and has an impressive client list that varies from luxury brand names such as Lamborghini, Ferrari, Maserati, Porsche and Bentley to more common brand names such as General Motors, Ford, Alfa Romeo, Jaguar, Land Rover, BMW, Volkswagen, Fiat (Abarth), Audi, Skoda and many more.
We have contracted to provide FIM with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth. |
FIM agreed to pay us a 10% cash success fee on any capital funding raised and a further 10% success equity fee based on International FIM SRL’s issued and outstanding shares, post capital funding. A possible listing on a recognized stock exchange will be subject to a separate agreement.
6) Primesite Developments Limited.
Primesite Developments Limited and its subsidiaries (“PS”), is a commercial and residential property development group based in the North West of England (United Kingdom).
We have contracted to provide PS with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Assist with a listing of the company´s shares on the NASDAQ OTCQB. |
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PS agreed to pay us a $300,000 cash fee and also a 5% equity fee. To date, PS has paid us $150,000 and has issued us 5,606,521 common shares and a further 450,000 Series “A” preferred shares.
7) Quartal Financial Solutions AG.
Quartal Financial Solutions AG (“QFS”) a Zurich - Switzerland based Financial Technology Company. QFS is a market leading Financial Technology software company providing specialized financial solutions to the global financial and insurance industry. Their suite of products focus on complex fee billing, revenue, commission, expense management and sophisticated high end reporting for global asset managers, banks, brokers, custodians, fund administrators, insurance companies, transfer agents and capital market firms.
We have contracted to provide QFS with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Assist with a listing of the company´s shares on the NASDAQ OTCQB. |
QFS agreed to pay us a $300,000 cash fee. QFS also agreed to pay us a 5% equity fee and a further 3% cash success fee based on the capital funding QFS raises. To date, QFS has paid us $150,000 and has issued us 5% of QFS’ issued and outstanding shares.
8) TAM Mining Limited.
TAM Mining Limited is a North East African natural resources company.
We have contracted to provide TAM with the following services:
● | Act as a corporate finance advisor and introduce the client to capital funding; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth. |
TAM agreed to pay us a $60,000 non-refundable cash fee.
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RESULTS FOR THE YEAR ENDED DECEMBER 31, 2014
At the beginning of 2014, we already had contracts with five companies. During 2014, we gained the following 8 new clients:
1) ATC Enterprises DMCC
ATC Enterprises DMCC (“ATC”) is a Dubai based company that has an innovative way to buy and sell diamonds. ATC DMCC is working with the Dubai Diamond Exchange to establish regular sales and tenders of rough cut diamonds in Dubai. The first of these was in January 2005. ATC have an extensive list of buyers from the UAE, Bombay, Surat, Ahmedabad, New York, Antwerp and the Far East, giving suppliers access to reliable and legitimate buyers throughout the world as well as the chance to trade in the unique and innovative environment in Dubai.
We have contracted to provide ATC with the following services:
● | Act as a corporate finance advisor to ATC; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
ATC agreed to pay us $30,000 for this initial ground work. A possible listing on a recognized stock exchange will be subject to a separate agreement.
2) Authenta Trade Inc.
Authenta Trade Inc. (“Authenta”) is a Canadian company based in Calgary, Canada with offices in Singapore and Cyprus. Authenta is in the business of developing a high security digital currency exchange. Authenta was formed specifically to address security concerns in the market place, is currently developing software that will tighten security to new levels and will also bring technology to the marketplace in order to make transacting in digital currencies such as Bitcoin, much simpler.
We have contracted to provide Authenta with the following services:
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● | Act as a corporate finance advisor to Authenta; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
Authenta agreed to pay us $60,000 for this initial ground work. A possible listing on a recognized stock exchange will be subject to a separate agreement.
3) Duo World Inc.
Duo World Inc. (“DUO”) a Nevada corporation, is a software company with subsidiaries in Sri Lanka, India and Singapore. DUO is an information technology and software solutions company, focused on bringing value to its clients through every customer interaction. DUO’s business model allows it to deliver consistent, quality service, at a scale and in the geographies that meet its clients’ business needs. They leverage their breadth and depth of capabilities to help companies create quality customer experiences across multiple channels, while increasing revenue and reducing their cost to serve their customers.
We have contracted to provide DUO with the following services:
● | Act as a corporate finance advisor to DUO; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with having its shares listed on the OTCQB. |
DUO agreed to pay us $250,000 and to date we have been paid $170,000. In addition, we have agreed that we will receive a 10% equity stake in DUO upon its initial public offering.
4) Medinas Holdings BV
Medinas Holdings BV (“Medinas”) is a Netherlands company with subsidiaries in the Netherlands and also in the U.S. that is the sole proprietor and holder of an FDA approved cure for peritoneal cancer.
We have contracted to provide Medinas with the following services:
● | Act as a corporate finance advisor to Medinas; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with having its shares listed on the Dubai NASDAQ. |
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Medinas agreed to pay us $465,000 and to date we have been paid $230,000. In addition, we have agreed that we will receive a 5% to 7% (depending on certain agreed upon milestones) equity stake in Medinas upon its initial public offering.
5) Precious Cells International Limited
Precious Cells International Limited (“Precious”) a U.K. company, is based in London. Precious is a medical technology company founded in 2009, with a key focus on the development of clinical technologies in the innovation of adult stem cells, cord blood stem cells and regenerative medicine (RM). Regenerative medicine consists of innovative medical therapies that will enable the body to repair, replace, restore and regenerate damaged or diseased cells, tissues and organs. These therapies are targeting the repair of damaged heart muscle following heart attacks, replacement of skin for burns victims, restoration of movement after spinal cord injury, regeneration of pancreatic tissue for insulin production in diabetics and provide new treatments for Parkinson’s and Alzheimer’s disease.
We have contracted to provide Precious with the following services:
● | Act as a corporate finance advisor to Precious; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
Precious agreed to pay us $30,000 for this initial ground work. A possible listing on a recognized stock exchange will be subject to a separate agreement.
6) Unii Limited
Unii Limited (“Unii”) is a U.K. based company and sole proprietor of the social media application “Fling – Message the World” that can be found in the Google Play Store and in Apple´s App Store and has grown virally to more than 3 million users at the date of this filing.
We have contracted to provide Unii with the following services:
● | Act as a corporate finance advisor to Unii; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
Unii agreed to pay us $60,000 for this initial ground work. Then in February of 2015, Unii agreed to a new contract whereby our Company would assist with a listing of their shares on a recognized exchange. The first part of this new agreement, $385,000, was paid to our Company in 2015.
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7) VT Hydrocarbon Holdings (Pte.) Ltd.
VT Hydrocarbon Holdings (Pte.) Ltd (“VTH”) is a Singapore based company whose ground operations are based in the Aqaba Special Economic Zone in Aqaba, Jordan. VTH is looking to acquire, operate, manage and build hydrocarbon storage farms in Aqaba and expand to repeat the formula in other parts of the world. VTH´s main business focus will be to provide Liquid Petroleum Gas storage as well as other wet fuel facilities.
We have contracted to provide VTH with the following services:
● | Act as a corporate finance advisor to VTH; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to potential sources of funding and once funding is sourced, assist with a potential IPO on the Dubai NASDAQ. |
VTH agreed to pay us $20,000 for the initial ground work and a success fee for any funds that the company raises as a result of our introductions, of 1% (Cash fee) and 1.5% (equity fee). A possible listing on a recognized stock exchange and a possible larger equity fee will be subject to a separate agreement.
8) Your MD AS
Your MD AS (“Your MD”) is a Norwegian based company and sole proprietor of the medical diagnostic application “Your MD” that can be found in the Google Play Store and in Apple´s App Store. This service brings healthcare advice to those in areas where primary healthcare is needed most; whether that’s due to large expense, poor access, and poor quality primary health or for those who are unable to travel. Your MD is primarily focused on emerging markets.
We have contracted to provide Your MD with the following services:
● | Act as a corporate finance advisor to Your MD; | |
● | Advise the client on possible corporate restructuring and assist the client in the preparation and authorization of documentation; | |
● | Use reasonable efforts through our marketing and public relations contacts to support and market the company, including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and inorganic growth; and | |
● | Introduce the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client with potential IPO on the Dubai NASDAQ. |
Your MD agreed to pay us $25,000 for this initial groundwork. A possible listing on a recognized stock exchange will be subject to a separate agreement.
In 2014, our client Direct Security Integration Inc., decided not to pursue a listing of its stock on a recognized Stock Exchange.
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LIQUIDITY AND CAPITAL RESERVES
Our consolidated financial statements contained herein have been prepared assuming that the Company will continue as a going concern. The Company had a net income from operations of $1,443,142, a total Other Income (Expenses) amounting to $(1,195,708) and net income of $247,434 for the year ended December 31, 2015.
The Company had $42,163 in cash; net cash used in operations of $74,150 for the year ended December 31, 2015; and a working capital deficit of $2,147,109 and stockholders´ equity of $523,443 as of December 31, 2015. Some of these factors raise substantial doubt about the Company’s ability to continue as a going concern.
The ability for the Company to continue its operations is primarily dependent on:
a) | Continually engaging with new clients, which over the years have become consistent | |
b) | Consummating and executing current engagements. |
Whilst the Company´s current engagements are being consummated and executed, management may decide to raise further interim funding on a non-convertible basis.
The Company´s deferred revenue, $839,130 at December 31, 2015, is non-refundable hence once certain contractual milestones are achieved or contractual terms pass over time, as applicable, on each individual engagement a proportion of deferred revenue will become revenue for the Company and therefore no cash outlays are required for these liabilities.
The Company may also need to borrow funds with certain related parties, such as management, to sustain the Company’s existence.
Also, in the event that operating cash flows are slowed, the Company would reduce its overheads wherever possible.
It is important to note that the two largest debts stated on our current liabilities are non-collateralized and non-convertible loans and any monies owed to management can be forgiven, if necessary.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
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It is the Company’s intention to seek additional debt financing, which we plan to use as additional working capital to implement our marketing program to increase awareness of our business model and also to expand our operations via the acquisition of companies that are in a similar space and industry as ours, although we have not identified any companies that we would consider acquiring. However, we do not have any verbal or written agreements with anyone to provide us with debt financing. Any short fall in our projected operating revenues will be covered by:
● | The cash fees that we expect to receive during the next 12 months from the clients we currently have under contract. | |
● | Receiving loans from one or more of our officers even though at the present time, we do not have verbal or written commitments from any of our officers to lend us money. | |
● | Receiving loans from third party lenders and/ or investors. |
FUTURE PLANS
Our specific plan of operations and milestones through March 2017 are as follows:
To date we have 15 clients under contract that we deem to be active and are either seeking a listing on a recognized stock exchange or seeking funding for acquisition and growth:
Client: | Sector: | ||
1 | Regis Card Group Limited | Prepaid cards and payment services. | |
2 | Arrow Cars International Inc. | Long term car rental. | |
3 | Medinas Holdings BV | Therapeutical stomach cancer treatment. | |
4 | Duo World Inc | Software development and integration. | |
5 | VT Hydrocarbon Holdings (Pte.) | LNG Gas storage. | |
6 | Authenta Trade | Bitcoin. | |
7 | ATC Enterprises DMCC | Diamonds. | |
8 | Unii Limited | Mobile Applications such as “Fling”. | |
9 | Energy Equity Resources (Norway) Limited | Natural resources. | |
10 | Scandinavian AgriTex Co. Limited | Cotton and clothing industry. | |
11 | Tam Mining Limited | Natural resources. | |
12 | Primesite Developments Limited | Residential and commercial Development. | |
13 | International FIM SRL | Manufacturing of automotive car parts. | |
14 | INSCX Exchange Limited | Nano-technology exchange. | |
15 | Quartal Financial Solutions AG | Financial Technology |
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1) | DEVELOP THE INTRODUCER NETWORK FURTHER AND IN HOPES OF ATTRACTING NEW INTEREST FOR OUR SERVICES. |
We currently are relying on introductions to potential clients by the following firms in the Middle East, South East Asia, Europe and the US:
● | Certain registered investment houses and funds in London (United Kingdom) | |
● | An Austrian management consultancy firm based in Vienna (Austria) | |
● | Various investment banks based in Dubai (UAE) | |
● | Certain Private Banks based in Amsterdam (Holland), Luxembourg (Luxembourg) and Zurich in Switzerland | |
● | Various family offices in Dubai (UAE) | |
● | Various introducers to Capital based on the East and West coast of the US | |
● | Various introducers to Capital based in South East Asia | |
● | Yemon (Pvt.) Limited – An introducer of new business based in Sri Lanka | |
● | MEPEX – A Bahrain Oil and Gas exhibit with over 280 members | |
● | Sixfoursixfour Limited and the World Nano Foundation |
We intend to develop relationships with a further six “introducers” to potential new business for the Company within the next 12 months.
2) | NEW BUSINESS |
During next 12 months, we believe that we have the capacity to sign at least another 12 new clients in various sectors and located around the globe.
3) | DUBAI EXPANSION |
We will continue to establish a firm presence in Dubai, UAE where we are attracting clients, relationships and awareness. Our Dubai operation is currently a branch office of the Company allowing us a license to trade in the area. This branch office will continue to recruit new members of staff that will allow us to grow and become more efficient in Dubai.
4) | SOUTH EAST ASIAN EXPANSION |
We will continue to establish a firm presence in South East Asia where we are attracting clients, relationships and awareness.
5) | OPEN AN OFFICE IN THE US. |
Within the next 12 months, we plan to open an office on the east coast of the USA in order to substantially expand our network of introducers to new business and also professionals and consultants.
6) | EXPAND OUR CONSULTANCY TO INCLUDE MORE MERGER AND ACQUISITION ACTIVITY. |
We intend to form relationships with merger and acquisition specialists during the next 12 months, which will hopefully enable us to:
● | Find potential merger and acquisition candidates. | |
● | Introduce our clients to brokers and investment bankers. | |
● | Introduce our clients to the appropriate professionals (attorneys and accountants) to assist them in a public offering or exchange listing. |
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7) | DEVELOP IN HOUSE IT DEPARTMENT |
Commencing initially with one member we will start to develop a proprietary program allowing us to easily monitor a client’s development status and work in progress. We will also use this tool to manage our pipeline of clients and therefore it will become vital in our cash flow forecasting.
8) | EXPAND OUR HUMAN RESOURCES DEPARTMENT IN DUBAI – KINGSMAN JAMES. |
The Company created an in-house human resources department called “Kingsman James” (http://kingsmanjames.com/) with a view to be able to provide its existing clients and other new clients with the possibility of restructuring their companies management with seasoned professionals, if required. We intend to continue expanding this human resources department throughout the next 12 months.
9) | EXPAND OUR NETWORK OF CONTACTS WITHIN THE INVESTMENT COMMUNITY |
During the next 12 months, we intend to substantially expand our Middle Eastern, South East Asian and also our US networks in order to enable us to make introductions on a more institutional level. At present, we are being received with open arms by all of the financial communities with whom we have contact; hence, we have plans to host various hospitality events for our current clients, our key contacts and upper management of the Company.
10) | EXPAND OUR RANGE OF BUSINESS AND CONTACTS |
We intend to take our consultancy service outside of the Middle East and Europe and into Asia and Sri Lanka. We will expand on a “Commission Only” basis for the individuals or companies who take on our service to offer to their clients. Accountants, lawyers and finance professionals are the target market for overlaying our service into their existing client banks in return for a percentage of fees received. We also intend to add at least two new members to our administration team during the next 12 months.
11) | ROAD SHOWS |
We will continue working on different “Road shows” in Dubai, Europe, South East Asia and the US.
12) | FURTHER EXPAND OUR RANGE OF BUSINESS AND CONTACTS |
We intend to cement the relationships created. The target markets for attracting clients are: Thailand, Sri Lanka, China, Hong Kong and Singapore. To service the clients generated from these markets, we will spend time creating a network of service companies who we can utilize to assist us on a local basis. We will explore the possibilities of dual listings for our clients in Singapore to allow us a local market for any Asian clients we will attract and giving the Company a firm foothold in the Asian territory.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our financial statements and supplementary data may be found beginning at page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
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ITEM 9A. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934) were effective as of the period covered by this report.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
(1) | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; | |
(2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and | |
(3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, under the supervision and with the participation of our principal Executive Officer and Principal Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making this assessment, management used the framework set forth in the report entitled Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permits us to provide only management’s report in this Annual Report. Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of the end of the period covered by this report based on that criteria.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.
There were no changes in our internal control over financial reporting during our last fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Not applicable.
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. OFFICERS AND DIRECTORS
Our two directors will serve until their two successors are elected and qualified. Our officers are elected by the board of directors to a term of one year and serve until their successor is duly elected and qualified, or until they are removed from office. Our board of directors has no nominating, auditing or compensation committees.
The names, addresses, ages and positions of our officers, directors and key employees are set forth below:
First Year | ||||||
Name | Age | as Director | Position | |||
Charles Taylor | 77 | 2015 | Director and Chairman of the Board | |||
Peter James Smith | 47 | 2010 | President, Chief Executive Officer and Director | |||
Enzo Taddei | 43 | 2011 | Chief Financial Officer, Secretary and Director | |||
Patrick V. Dolan | 57 | 2015 | New Business Development Managing Director and Director |
The persons named above were elected to hold their offices until the next annual meeting of our stockholders.
CHARLES TAYLOR – CHAIRMAN OF THE BOARD OF DIRECTORS
Charles Taylor has served as the Chairman of the Board of Director of Global Equity International Inc. since October 7, 2015. Previously, he acted in an advisory role to a number of major investment banking houses, including Lehman Brothers and Goldman Sachs, analyzing investment portfolio strengths and strategies. He acted in an advisory capacity directly to Goldman Sachs and reviewed their investment portfolios for specific business improvement candidates. He then went on to lead teams in the “Turnarounds” of those targets.
In addition, he has led management consulting assignment teams in numerous industries. He has served as Vice-Chairman of the Board of a Telecom Italia subsidiary, Chairman of Amdahl Italia (an IT firm headquartered in Rome, Italy) and DMR Italia (a subsidiary of Fujitsu), CFO and Director of Monte Carlo Sat (a Monaco-based television operator), EVP and CFO of GBTIMES, Ltd (a Chinese Government owned EU media company) and founder and Chairman of the Board of Telos - a US-based renewable energy company.
In addition to these Board seats, Charles held an executive position as CFO of AT&T International, where he developed and managed operating budgets in 52 different countries, and as CFO of a $3 billion consumer products division of a major telecommunications company.
He has lectured at Thunderbird University, Bocconi University in Milan and Scuola Superiore Sant’ Anna in Pisa, Italy on IT Strategy, Technology Convergence and “The Global Village” – a course designed for business leaders seeking to extend operations into additional countries.
He received an undergraduate degree in economics from Fenn University, attended graduate marketing studies at Columbia University and attended additional graduate courses in economics and business at Wharton and Stanford.
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PETER JAMES SMITH - PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
Mr. Smith has served as the President, Chief Executive Officer and Director of Global Equity Partners, PLC, our now wholly-owned subsidiary, since its formation on September 2, 2009. Mr. Smith has also served as the President, Chief Executive Officer and Director of the Company since December 31, 2010. Between June 1, 2006, and September 2, 2009, when he formed Global Equity Partners Plc., Mr. Smith was not employed and spent his time researching the market for the consulting business in which Global Equity Partners, PLC would be engaged. In 1993, he created an international financial services company in the Middle East and Asia, named Belgravia Financial Management, and served as the Chief Executive Officer of that firm until he resigned in May 2006. Between 1993 and May 2005, he built Belgravia Financial Management to 23 global offices, 5 country licenses, a Company with $2.2 billion under financial management. Belgravia Financial Management merged with Intervest SL and became Belgravia Intervest Group Limited. Belgravia Intervest Group Limited subsequently merged with Tally Ho Ventures, Inc. (TLYH.OB) on May 12, 2005. In 2006, Mr. Smith resigned from his position as Chief Executive Officer of Tally Ho Ventures, Inc. Tally Ho Ventures, Inc. subsequently changed its name to Premier Wealth Management, Inc. on September 26, 2007. Mr. Smith first qualified as a stockbroker in London in 1986 with Rensburg and Co. where he became both a registered equity trader and registered representative of the firm that is a UK registered, full service stockbroker trading equities, options, warrants, gilts and bonds. He also spent 12 months within that firm covering the back office facilities of a brokerage house including sales, purchase, rights, dividends and new issues. He then moved on to the London Traded Options Market where he passed his LTOM open outcry examinations to become an options trader for a subsidiary of ABN Amro bank called International Clearing Services (ICS). As an Options trader, his job was to trade options on behalf of all the firm’s clients and to hedge the positions of the market makers the firm cleared for in the equity market. As the sole dual qualified broker for ICS, he was constantly trading in either equities or options, either by open outcry or screen dealing on the London Stock Exchange Floor on Threadneedle Street.
ENZO TADDEI - CHIEF FINANCIAL OFFICER, SECRETARY AND DIRECTOR
Mr. Taddei was appointed as our Chief Financial Officer and a member of our Board of Directors on September 1, 2011. From November 2010 until December 8, 2011, when he resigned from such offices, Mr. Taddei was a member of the Board of Directors and part-time Chief Financial Officer of Networking Partners, Inc., a social networking company, now known as Sonant Systems Inc. Mr. Taddei resigned from such offices in order to devote more time and effort to our Company. However, Mr. Taddei is currently the Chief Executive Officer and sole Director of Sonant Systems, Inc. From March 2007 until May 2009, Mr. Taddei served as Chief Financial Officer of Dolphin Digital Media (a company engaged in social networking). From August 2006 until March 2007, Mr. Taddei served as Chief Financial Officer of Plays on the Net Plc. (an E-Commerce firm). From July 1999 until August 2006, Mr. Taddei served as director and partner of Adesso Res Asesores (an accounting firm). In addition to being an accountant and tax consultant by profession, Mr. Taddei is proficient in three languages: English, Spanish and Italian. He obtained a Degree in Economics from EADE University in Malaga (Spain) in 1998 and also a Bachelor in Business Administration (BBA) from the University of Wales in 1996. He also holds a “Masters Degree” in Spanish and International Taxation granted to him by EADE University in Malaga (Spain) in 2000.
PATRICK V. DOLAN – NEW BUSINESS DEVELOPMENT MANAGING DIRECTOR AND DIRECTOR
As a senior figure from the software and technology industries with over 20 years’ experience, Mr. Dolan has successfully held numerous senior management positions within large and small enterprises in the U.S., Asia Pacific and in Europe. Often hand selected and recruited, Patrick has proven himself as the right person to correct the issues that typically prevent the success of many companies today. Patrick’s “Make it Work” approach, which has included providing the right amount of capital at the right time, building a focused and dedicated sales force, as well as infrastructure and restructuring changes, has made him standout as one of the best company restructuring professionals in recent times. Patrick possesses expertise and extensive knowledge in managing large global operations, which include such companies as Standard & Poors, Dow Jones, Citibank, State Street and, more recently, Merchant Capital. His overachievements while with Merchant Capital not only produced a tremendous amount of new clientele, but it also allowed him the privilege of being introduced to a broader range of companies and professionals who came to him seeking professional assistance. Utilizing his broad range of business expertise, Patrick often placed himself in the middle of these situations and successfully produced the changes that were necessary to achieve the company’s growth objectives. In the last 12 years, he has also worked within the technology and software sectors with small to medium sized companies, while expanding their operations and increasing revenues as part of their executive teams. Patrick has also worked closely with numerous Private Equity and Venture Capital Firms in Europe and the U.S., principally as an executive retained and placed within companies who were part of their investment portfolios. Patrick brings a wealth of experience from both an operational and capital raising perspective and has significant contacts across the financial markets.
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INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Except as described below, during the past ten years, no present director, executive officer or person nominated to become a director or an executive officer of the Company:
(1) | had a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; | |
(2) | was convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
(3) | was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any of the following activities: |
(i) | acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; | |
(ii) | engaging in any type of business practice; or | |
(iii) | engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; or |
(4) | was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of an federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3) (i), above, or to be associated with persons engaged in any such activity; | |
(5) | was found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission to have violated a federal or state securities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not been subsequently reversed, suspended or vacated; | |
(6) | was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; |
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(7) | was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to any alleged violation of: |
i. | Any Federal or State securities or commodities law or regulation; or | |
ii. | Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or | |
iii. | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
(8) | was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), and registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
ABSENCE OF INDEPENDENT DIRECTORS
We do not have any independent directors and are unlikely to be able to recruit and retain any independent directors due to our small size and limited financial resources.
DIRECTOR QUALIFICATIONS
We do not have a formal policy regarding director qualifications. In the opinion of Peter J. Smith, our President and majority shareholder, Messrs. Dolan, Taddei and he have sufficient business experience and integrity to carry out the Company’s plan of operations. Messrs. Dolan, Smith and Taddei recognize that the Company will have to rely on professional advisors, such as attorneys and accountants with public company experience to assist with compliance with Exchange Act reporting and corporate governance matters.
DIRECTORSHIPS
None.
AUDIT COMMITTEE FINANCIAL EXPERT
Although we have not established an Audit Committee, the functions of the Audit Committee are currently carried out by our Board of Directors.
FAMILY RELATIONSHIPS
There are no family relationships between or among or officers and directors.
CODE OF BUSINESS CONDUCT AND ETHICS
On September 2, 2011, we adopted a Code of Business Conduct and Ethics applicable to our officers, including our principal executive officer, principal financial officer, principal accounting officer or controller and any other persons performing similar functions. Our Code of Business Conduct and Ethics was designed to deter wrongdoing and promote honest and ethical conduct, full, fair and accurate disclosure, compliance with laws, prompt internal reporting and accountability to adherence to our Code of Business Conduct and Ethics. Our Code of Business Conduct and Ethics is posted on our website at http://www.globalequityincusa.com/ in the “Governance” section. We also intend to disclose any future amendments to, and any waivers from (though none are anticipated), the Code of Business Conduct and Ethics in the “Governance” section of our website.
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ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the aggregate compensation paid by the Company and/or its subsidiary, Global Equity Partners Plc., to our executive officers and directors of the Company for services rendered during the periods indicated.
SUMMARY COMPENSATION TABLE
Name
and Principal Position | Year | Salary ($) | Note | Bonus / Other compensation ($) | Note | Stock Awards ($) | Note | All other stock compensation (s) | Note | Total ($) | ||||||||||||||||||||||||||||||
Peter J. Smith | 2015 | $ | 198,450 | (1) | $ | 133,178 | (2) | $ | - | $ | - | 331,628 | ||||||||||||||||||||||||||||
President, Chief | 2014 | $ | 184,500 | $ | 120,000 | $ | - | $ | - | $ | 304,500 | |||||||||||||||||||||||||||||
Executive Officer & Director | 2013 | $ | 180,000 | $ | 60,000 | $ | 240,000 | $ | - | $ | 480,000 | |||||||||||||||||||||||||||||
Enzo Taddei | 2015 | $ | 198,450 | (3) | $ | 45,000 | (4) | $ | - | $ | - | $ | 243,450 | |||||||||||||||||||||||||||
Chief Financial | 2014 | $ | 184,500 | $ | 45,000 | $ | - | $ | - | $ | 229,500 | |||||||||||||||||||||||||||||
Officer, Secretary & Director | 2013 | $ | 180,000 | $ | - | $ | 240,000 | $ | - | $ | 420,000 | |||||||||||||||||||||||||||||
Patrick V. Dolan | 2015 | $ | 132,300 | (5) | $ | - | $ | - | $ | - | $ | 132,300 | ||||||||||||||||||||||||||||
Director | 2014 | $ | 120,000 | $ | - | $ | 80,000 | $ | - | $ | 200,000 | |||||||||||||||||||||||||||||
2013 | $ | 120,000 | $ | 5,000 | $ | - | $ | - | $ | 125,000 | ||||||||||||||||||||||||||||||
Charles Taylor | 2015 | $ | - | $ | - | $ | 40,000 | (6) | $ | - | $ | 40,000 | ||||||||||||||||||||||||||||
Chairman of the | 2014 | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||||||||||||
Board of Directors | 2013 | $ | - | $ | - | $ | - | $ | - | $ | - |
(1) | $151,374 paid in cash, $51,044 was accrued and $106,056 of the 2015 salary and the accrued 2014 salary was converted into common restricted shares. | |
(2) | $133,178 equated to Mr. Smith´s personal rent in Dubai, which was paid by the company in cash. | |
(3) | $112,714 paid in cash, $59,206 was accrued and $173,901 of the 2015 salary and the accrued 2014 salary was converted into common restricted shares. | |
(4) | $45,000 paid in cash. | |
(5) | $66,391 paid in cash, $42,625 was accrued and $118,199 of the 2015 salary and the accrued 2014 salary was converted into common restricted shares. | |
(6) | 100% of the agreed salary was paid in common restricted shares of the company. |
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EMPLOYMENT AGREEMENTS SUMMARY
PETER JAMES SMITH:
Mr. Smith’s employment agreement with the Company was renewed on January 1, 2016, and the basic terms were as follows:
1. | DUTIES - ASSIGNMENT: Chief Executive Officer (CEO) and Director on Board of Directors. | |
2. | COMPENSATION:
$210,000 per annum, subject to annual review and adjustment of no less than a 5% percentage increase. The salary will be paid on a monthly basis. | |
3. | EMPLOYMENT: |
(a) | Employment will continue for 36 months. |
4. | SEVERANCE PAYMENTS |
(a) | If Employer terminates this Agreement for any reason other than Disability, Death, Employee shall be entitled to receive, and Employer shall make, the following severance payments: |
(i) | continue to pay a sum equivalent to twelve months salary. |
(b) | If Employer terminates this Agreement by reason of the Disability of Employee or if this Agreement is automatically terminated upon the Death of Employee pursuant to Section 3(b), Employee or his estate shall be entitled to receive, and Employer shall make, the following severance payments: |
(i) | continue to pay a sum equivalent to five years annual salary via the life assurance scheme. |
5. | RENTAL ALLOWANCE: |
The company will pay the CEO´s rent in Dubai up to a maximum of $30,000 per quarter.
6. | COMISSION INCENTIVES |
The Company agreed to pay a cash bonus equivalent to 6% of all of the gross cash success fees that the Company receives during the term of the employment agreement.
ENZO TADDEI:
Mr. Taddei’s employment agreement with the Company was renewed on January 1, 2016 and the basic terms were as follows:
1. | DUTIES - ASSIGNMENT: Chief Financial Officer (CFO) and Director on Board of Directors | |
2. | COMPENSATION:
$210,000 per annum, subject to annual review and adjustment of no less than a 5% percentage increase. The salary will be paid on a monthly basis. It was also agreed that the company would pay a bonus of 12% of the annual salary in June of each year. |
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3. | EMPLOYMENT: |
(a) | Employment will continue for 36 months. |
4. | SEVERANCE PAYMENTS |
(a) | If Employer terminates this Agreement for any reason other than Disability, Death, Employee shall be entitled to receive, and Employer shall make, the following severance payments: |
(i) | continue to pay a sum equivalent to twelve months. |
(b) | If Employer terminates this Agreement by reason of the Disability of Employee or if this Agreement is automatically terminated upon the Death of Employee pursuant to Section 3(b), Employee or his estate shall be entitled to receive, and Employer shall make, the following severance payments: |
(i) | continue to pay a sum equivalent to five years annual salary via the life assurance scheme. |
5. | COMISSION INCENTIVES |
The company agreed to pay a cash bonus equivalent to 6% of the gross cash success fees that the Company receives during the term of the employment agreement. |
PATRICK V. DOLAN:
Mr. Dolan’s employment agreement with the Company’s subsidiary, Global Equity Partners Plc, was executed effective March 1, 2016 and the basic terms were as follows:
1. | DUTIES - ASSIGNMENT: Managing Director of Global Equity Partners Plc. | |
2. | COMPENSATION:
$132,000 per annum. The salary will be paid on a monthly basis. | |
3. | EMPLOYMENT: |
(a) | Employment will continue for 24 months. |
4. | COMISSION INCENTIVES | |
The company agreed to pay a cash bonus equivalent to 3% of the gross cash success fees that the Company receives during the term of the employment agreement. |
CHARLES TAYLOR:
Mr. Taylor’s employment agreement with the Company was executed effective October 7, 2015 and the basic terms were as follows:
1. | DUTIES - ASSIGNMENT: Chairman of the Board of Directors. | |
2. | COMPENSATION: | |
1,000,000 common restricted shares of Global Equity International Inc. equivalent to $40,000. |
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3. | EMPLOYMENT: |
(a) | Employment will continue for 6 months with an option to renew the agreement for a further 6 months where there would be a monthly cash salary contemplated. |
STOCK OPTION AND OTHER COMPENSATION PLANS.
Aside from the employment agreements with Messrs. Dolan, Smith and Taddei, the Company currently does not have a stock option or any other compensation plan and we do not have any plans to adopt one in the near future.
COMPENSATION OF DIRECTORS
Our directors do not receive any compensation for serving as a member of our board of directors, as they are compensated pursuant to their employment agreements as officers of the Company.
No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.
There are no understandings or agreements regarding compensation our management will receive after a business combination that is required to be included in this table, or otherwise.
INDEMNIFICATION.
Article VII, Section 7 of the Company’s Bylaws provide that the Company shall indemnify its officers, directors, employees and agents to the fullest extent permitted by the laws of Nevada.
The Nevada Revised Statutes allow us to indemnify our officers, directors, employees, and agents from any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except under certain circumstances. Indemnification may only occur if a determination has been made that the officer, director, employee, or agent acted in good faith and in a manner, which such person believed to be in the best interests of the corporation. A determination may be made by the shareholders; by a majority of the directors who were not parties to the action, suit, or proceeding confirmed by opinion of independent legal counsel; or by opinion of independent legal counsel in the event a quorum of directors who were not a party to such action, suit, or proceeding does not exist.
The expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by us as they are incurred and in advance of the final disposition of the action, suit or proceeding, if and only if the officer or director undertakes to repay said expenses to us if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us.
The indemnification and advancement of expenses may not be made to or on behalf of any officer or director if a final adjudication establishes that the officer’s or director’s acts or omission involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action.
The Nevada Revised Statutes allow a company to indemnify our officers, directors, employees, and agents from any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except under certain circumstances. Indemnification may only occur if a determination has been made that the officer, director, employee, or agent acted in good faith and in a manner, which such person believed to be in the best interests of the corporation. A determination may be made by the stockholders; by a majority of the directors who were not parties to the action, suit, or proceeding confirmed by opinion of independent legal counsel; or by opinion of independent legal counsel in the event a quorum of directors who were not a party to such action, suit, or proceeding does not exist.
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SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the company, we have been advised by our special securities counsel that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy and is, therefore, unenforceable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following tables set forth, as of the date of this Annual Report, the ownership of our common stock and preferred stock by (a) each person known by us to be the beneficial owner of more than 5% of our outstanding common stock and preferred stock; and (b) by all of named officers and our directors and by all of our named executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares and are beneficial owners of the shares indicated in the tables, except as otherwise noted by footnote.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the U.S. Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.
(a) Security ownership of certain beneficial owners:
Title of Class | Name
and Address of Beneficial Owner | Amount
and Nature of Beneficial Ownership | Notes | Percent of Class | ||||||||||
Common Stock | Peter J. Smith, | 271,160,920 | 1 | 34.96 | % | |||||||||
38 Frond “F” Palm Jumeirah, | ||||||||||||||
Dubai, UAE. | ||||||||||||||
Common Stock | Enzo Taddei, | 226,167,448 | 2 | 29.14 | % | |||||||||
Apt. 6701, Golden Mile, | ||||||||||||||
Building 6, Palm Jumeirah, | ||||||||||||||
Dubai, UAE. | ||||||||||||||
Common Stock | Patrick V. Dolan | 47,784,404 | 3 | 6.16 | % | |||||||||
24 Harthill Road | ||||||||||||||
Liverpool L18 6LY | ||||||||||||||
United Kingdom |
(1) | Mr. Smith is the direct beneficial owner of, and has sole dispositive and voting power over, these shares. | |
(2) | Mr. Taddei is the direct beneficial owner of, and has sole dispositive and voting power over, these shares. | |
(3) | Mr. Dolan is the direct beneficial owner of, and has sole dispositive and voting power over, these shares. |
55 |
(b) Security ownership of management:
Title of Class | Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||||
Common Stock | Peter J. Smith | 271,160,920 | (1) | 34.96 | % | |||||
Common Stock | Enzo Taddei | 226,167,448 | (2) | 29.14 | % | |||||
Common Stock | Patrick V. Dolan | 47,784,404 | (3) | 6.16 | % | |||||
Common Stock | Charles Taylor | 1,000,000 | (4) | 0.13 | % | |||||
Common Stock | All officers and directors as a group (4 persons) | 546,112,772 | 70.39 | % |
(1) | Mr. Smith is the direct beneficial owner of, and has sole dispositive and voting power over, these shares. | |
(2) | Mr. Taddei is the direct beneficial owner of, and has sole dispositive and voting power over, these shares. | |
(3) | Mr. Dolan is the direct beneficial owner of, and has sole dispositive and voting power over, these shares. | |
(4) | Mr. Taylor is the direct beneficial owner of, and has sole dispositive and voting power over, these shares. |
(c) Changes in control:
We are not aware of any arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
Although we have not adopted formal procedures for the review, approval or ratification of transactions with related persons, we adhere to a general policy that such transactions should only be entered into if they are on terms that, on the whole, are no more favorable, or no less favorable, than those available from unaffiliated third parties and their approval is in accordance with applicable law. Such transactions require the approval of our board of directors.
56 |
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
INDEPENDENT PUBLIC ACCOUNTANTS
1) | Audit Fees. We incurred an aggregate fee of $24,500 for the audit of our annual financial statements for the year ended December 31, 2015 and quarterly reviews for two quarters (June 30, 2015 and September 30, 2015), to be paid to our auditors, Salberg & Company PA. We also incurred a fee of $10,000 for the re-audit of our annual financial statements for the year ended December 31, 2014 due to the fact that our predecessor auditors, De Joya Griffith, de-registered from the PCAOB. | |
We also incurred in a fee of $3,500 for our March 31, 2015 quarterly review carried out by our prior auditors, De Joya Griffith. | ||
During the fiscal year ended December 31, 2014, we incurred $26,055 aggregate fees billed by the Company’s predecessor auditors, De Joya Griffith, for services rendered for the review of the financial statements included in our quarterly reports on Form 10-Q and the annual audit for the year ended December 31, 2014. | ||
2) | Audit-Related Fees. During fiscal years ended December 31, 2015 and 2014, our current and prior auditors did not receive any fees for any audit-related services. | |
3) | All Other Fees. None. | |
4) | Audit Committee’s Pre-Approval Policies and Procedures. |
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before Principal Accountants are engaged by us to render any auditing or permitted non-audit related service, the engagement be:
● | approved by our audit committee (which consists of our entire board of directors); or | |
● | entered into pursuant to pre-approval policies and procedures established by the board of directors, provided the policies and procedures are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures do not include delegation of the board of directors’ responsibilities to management. |
Our Board of Directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by our Board of Directors either before or after the respective services were rendered.
Our Board of Directors has considered the nature and amount of fees billed by our principal accountants and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our principal accountants’ independence.
During the 2015 and 2014 fiscal years, the Company used the following pre-approval procedures related to the selection of our independent auditors and the services they provide: unanimous consent of all directors via a board resolution.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) (1) Financial Statements
Financial statements for Global Equity International, Inc. listed in the Index to Financial Statements on page F-1 are filed as part of this Annual Report.
(a) (2) Financial Statement Schedule
Financial Statement Schedule for Global Equity International, Inc. listed in the Index to Financial Statements on page F-1 are filed as part of this Annual Report.
(a) (3) See the “Index to Exhibits” set forth below.
(b) See Exhibit Index below for exhibits required by Item 601 of Regulation S-K.
57 |
CONTENTS
F-2 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of:
Global Equity International Inc.
We have audited the accompanying consolidated balance sheets of Global Equity International, Inc. and Subsidiaries as of December 31, 2015 and 2014 and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Global Equity International, Inc. and Subsidiaries as of December 31, 2015 and 2014 and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company had a net income and net cash used in operations of $247,434 and $74,150, respectively for the year ended December 31, 2015. The Company has a working capital deficit and stockholders’ equity of $2,147,109, and $523,443, respectively, at December 31, 2015. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Salberg & Company, P.A.
SALBERG & COMPANY, P.A.
Boca Raton, Florida
March 18, 2016
2295 NW Corporate Blvd., Suite 240 ● Boca Raton, FL 33431-7328
Phone: (561) 995-8270 ● Toll Free: (866) CPA-8500 ● Fax: (561) 995-1920
www.salbergco.com ● info@salbergco.com
Member National Association of Certified Valuation Analysts ● Registered with the PCAOB
Member CPAConnect with Affiliated Offices Worldwide ● Member AICPA Center for Audit Quality
F-3 |
Global Equity International, Inc. and Subsidiaries
December 31, 2015 | December 31, 2014 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 42,163 | $ | 19,026 | ||||
Accounts receivable | - | 2,520 | ||||||
Prepaids | 86,398 | 6,248 | ||||||
Other current assets | 7,982 | 9,481 | ||||||
Loans receivable | - | 10,825 | ||||||
Total current assets | 136,543 | 48,100 | ||||||
Investments, cost | 2,650,471 | 3,000 | ||||||
Fixed assets, net | 20,081 | 30,224 | ||||||
Total assets | $ | 2,807,095 | $ | 81,324 | ||||
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity / (Deficit) | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 372,993 | $ | 114,191 | ||||
Accounts payable and accrued liabilities - related parties | 203,609 | 360,984 | ||||||
Deferred revenue | 839,130 | 462,015 | ||||||
Loans payable - related parties | - | 58,595 | ||||||
Accrued interest | 304,569 | 657,918 | ||||||
Loans payable - net of unamortized issue costs and discount of $11,667 and $0, respectively | 563,351 | 440,018 | ||||||
Convertible notes payable - net of unamortized discount of $0 and $87,064, respectively | - | 79,936 | ||||||
Embedded conversion option derivative liabilities | - | 301,937 | ||||||
Total current liabilities | 2,283,652 | 2,475,594 | ||||||
Long term liabilities | ||||||||
Convertible loan payable - related party - net of unamortized discount of $0 and $268,189, respectively | - | 33,800 | ||||||
Embedded conversion option derivative liabilities - related party notes | - | 393,510 | ||||||
Total liabilities | $ | 2,283,652 | $ | 2,902,904 | ||||
Redeemable Series A, Convertible Preferred Stock: 5,000,000 shares authorized; 0 and 1,983,332 issued and outstanding, respectively. | - | 1,020,000 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Stockholders’ Equity / (Deficit) | ||||||||
Common stock: 1,000,000,000 shares authorized; $0.001 par value 776,165,973 and 36,271,148 shares issued and outstanding, respectively. | $ | 776,166 | $ | 36,271 | ||||
Additional paid in capital | 6,934,493 | 3,472,904 | ||||||
Stock payable | - | 82,850 | ||||||
Accumulated deficit | (7,187,216 | ) | (7,434,650 | ) | ||||
Accumulated other comprehensive income | - | 1,045 | ||||||
Total stockholders’ equity / (deficit) | 523,443 | (3,841,580 | ) | |||||
Total liabilities, redeemable preferred stock & stockholders’ equity / (deficit) | $ | 2,807,095 | $ | 81,324 |
The accompanying notes are an integral part of these consolidated financial statements.
F-4 |
Global Equity International, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
For the years ended, | ||||||||
December 31, 2015 | December 31, 2014 | |||||||
Revenue - Clients | $ | 3,165,356 | $ | 515,000 | ||||
Revenue - Related party clients | 148,000 | - | ||||||
Total revenue | 3,313,356 | 515,000 | ||||||
General and administrative expenses | 454,859 | 314,095 | ||||||
Salaries | 1,071,999 | 816,323 | ||||||
Professional services | 332,105 | 254,953 | ||||||
Depreciation | 11,251 | 4,372 | ||||||
Impairment of investment | - | 2,000 | ||||||
Total operating expenses | 1,870,214 | 1,391,743 | ||||||
Net income / (loss) from operations | $ | 1,443,142 | $ | (876,743 | ) | |||
Other income (expense): | ||||||||
Interest expense | (337,106 | ) | (608,973 | ) | ||||
Finance Charges | (124,175 | ) | - | |||||
Amortization of debt discount | (355,253 | ) | (299,535 | ) | ||||
Loss on derivative liabilities | (407,482 | ) | (227,495 | ) | ||||
Loss on conversion of notes and other liabilities | (733,922 | ) | (369,949 | ) | ||||
Gain on settlement of debt | 660,578 | 138,834 | ||||||
Gain on extinguishment of other liabilities | 116,921 | 22,486 | ||||||
Bad debt expense | (13,345 | ) | - | |||||
Exchange rate loss | (1,924 | ) | (754 | ) | ||||
Total other income (expense) | $ | (1,195,708 | ) | $ | (1,345,386 | ) | ||
Net income (loss) | $ | 247,434 | $ | (2,222,129 | ) | |||
Weighted average number of common shares outstanding - basic & dilutive | 373,102,366 | 32,487,859 | ||||||
Net income (loss) per common share - basic & dilutive | $ | 0.001 | $ | (0.07 | ) | |||
Comprehensive income (Loss): | ||||||||
(Loss) / gain on foreign currency translation | (1,045 | ) | 1,045 | |||||
Net income (loss) | 247,434 | (2,222,129 | ) | |||||
Comprehensive income (Loss) | $ | 246,389 | $ | (2,221,084 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
F-5 |
Global Equity International, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders’ Equity / (Deficit)
For the years ended December 31, 2015 and 2014
Additional | Accumulated Other | Total Stockholders’ | ||||||||||||||||||||||||||
Common Stock | Paid-in | Stock | Accumulated | Comprehensive | Equity / | |||||||||||||||||||||||
Shares | Amount | Capital | Payable | Deficit | Income / (Loss) | (Deficit) | ||||||||||||||||||||||
Balance - December 31, 2013 | 31,044,202 | $ | 31,045 | $ | 2,657,659 | $ | 82,850 | $ | (5,212,521 | ) | $ | - | $ | (2,440,967 | ) | |||||||||||||
Common stock issued in settlement of debt and accrued interest | 3,908,446 | 3,908 | 613,621 | - | - | - | 617,529 | |||||||||||||||||||||
Common stock issued for services | 818,500 | 818 | 105,457 | - | - | - | 106,275 | |||||||||||||||||||||
Common stock issued in lieu of salary bonus ($0.16 per share) | 500,000 | 500 | 79,500 | - | - | - | 80,000 | |||||||||||||||||||||
Debt discount on note converted | - | - | 16,667 | - | - | - | 16,667 | |||||||||||||||||||||
Net loss | - | - | - | - | (2,222,129 | ) | - | (2,222,129 | ) | |||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 1,045 | 1,045 | |||||||||||||||||||||
Balance - December 31, 2014 | 36,271,148 | $ | 36,271 | $ | 3,472,904 | $ | 82,850 | $ | (7,434,650 | ) | $ | 1,045 | $ | (3,841,580 | ) | |||||||||||||
Common stock issued in settlement of debt and accrued interest | 557,956,997 | 557,957 | 1,222,927 | - | - | - | 1,780,884 | |||||||||||||||||||||
Common stock issued in settlement of accrued salary and commission | 175,297,274 | 175,297 | 1,071,210 | - | - | - | 1,246,507 | |||||||||||||||||||||
Common stock issued for services provided | 6,640,554 | 6,641 | 147,452 | - | - | - | 154,093 | |||||||||||||||||||||
Cancellation of preferred stock | - | - | 1,020,000 | - | - | - | 1,020,000 | |||||||||||||||||||||
Stock payable written back | - | - | - | (82,850 | ) | - | - | (82,850 | ) | |||||||||||||||||||
Net income | - | - | - | - | 247,434 | - | 247,434 | |||||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | (1,045 | ) | (1,045 | ) | |||||||||||||||||||
Balance - December 31, 2015 | 776,165,973 | $ | 776,166 | $ | 6,934,492 | $ | - | (7,187,216 | ) | $ | - | $ | 523,443 |
The accompanying notes are an integral part of these consolidated financial statements.
F-6 |
Global Equity International Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For the years ended, | ||||||||
December 31, 2015 | December 31, 2014 | |||||||
Cash flows from operating activities | ||||||||
Net income / (loss) | $ | 247,434 | $ | (2,222,129 | ) | |||
Adjustments to reconcile net income / (loss) to net cash provided by (used in) operating activities | ||||||||
Depreciation | 11,251 | 4,372 | ||||||
Common stock issued for bonus | - | 80,000 | ||||||
Consulting revenue as repayment of loan | - | (50,000 | ) | |||||
Common stock issued for services rendered | 155,827 | 106,275 | ||||||
Securities received as payment for services | (2,647,471 | ) | - | |||||
Loss on conversion of notes | 733,922 | 369,949 | ||||||
Loss on derivate liability - Notes payable | 407,482 | 227,495 | ||||||
Gain on settlement of debt | (660,578 | ) | (138,834 | ) | ||||
Gain on extinguishment of other liabilities | (116,921 | ) | (22,486 | ) | ||||
Amortization of debt discount | 355,253 | 299,535 | ||||||
Impairment loss on available for sale marketable securities | - | 2,000 | ||||||
Bad debts | 13,345 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaids | (80,150 | ) | 26,049 | |||||
Accrued interest and finance charges | 441,358 | 608,973 | ||||||
Accounts payable and accrued liabilities | 445,780 | 91,464 | ||||||
Accounts payable - related parties | 240,704 | 168,931 | ||||||
Deferred revenue | 377,115 | 215,015 | ||||||
Accounts receivable | - | - | ||||||
Other current assets | 1,499 | 442,719 | ||||||
Net cash (used in) / provided by operating activities: | $ | (74,150 | ) | $ | 209,328 | |||
Cash Flows used in investing activities: | ||||||||
Office furniture and equipment, net | (1,108 | ) | (26,779 | ) | ||||
Loans given to non-affiliate | - | (4,825 | ) | |||||
Net cash used in investing activities | $ | (1,108 | ) | $ | (31,604 | ) | ||
Cash flows from financing activities: | ||||||||
Proceeds from loans - related parties | 48,422 | 1,401 | ||||||
Repayment of loans - related parties | (5,500 | ) | - | |||||
Convertible loan payable | - | 240,500 | ||||||
Proceeds from notes payable | 100,000 | - | ||||||
Proceeds from issuance of common stock | - | - | ||||||
Repayment of notes payable | (43,482 | ) | (450,500 | ) | ||||
Proceeds from issuance of common stock | - | - | ||||||
Net cash provided by / (used in) financing activities | $ | 99,440 | $ | (208,599 | ) | |||
Net increase / (decrease) in cash | $ | 24,182 | $ | (30,875 | ) | |||
Effect of Exchange Rates on Cash | (1,045 | ) | 1,045 | |||||
Cash at Beginning of Year | $ | 19,026 | $ | 48,856 | ||||
Cash at End of Year | $ | 42,163 | $ | 19,026 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 30,981 | $ | - | ||||
Cash paid for income taxes | $ | - | $ | - | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Notes payable and interest converted into shares | $ | 637,820 | $ | 124,534 | ||||
Cancellation of notes payable and subscription receivable against it | - | 100,000 | ||||||
Debt discount and issuance costs recorded on notes payable | $ | 35,000 | $ | 5,000 | ||||
Accounts payable and accrued salaries settled in shares | $ | 552,958 | $ | - | ||||
Cancellation of redeemable series A preferred stock |
$ | 1,020,000 | $ | - |
The accompanying notes are an integral part of these consolidated financial statements.
F-7 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Note 1 - Organization and Nature of Operations
Global Equity Partners, Plc. (“GEP”), a private company, was organized under the laws of the Republic of Seychelles on September 2, 2009. Global Equity International, Inc. (the “Company” or “GEI”), a reporting company since June 21, 2012, was organized under the laws of the state of Nevada on October 1, 2010. On November 15, 2010, GEP executed a reverse recapitalization with GEI. On August 22, 2014, we formed a Dubai subsidiary of Global Equity Partners Plc. called GE Professionals DMCC. Global Equity Partners Plc. is the parent company of its 100% owned subsidiary, GE Professionals DMCC (Dubai).
Revenue is generated from business consulting services, introduction fees, and equity participation.
Note 2 - Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All amounts in the consolidated financial statements are stated in U.S. dollars.
Note 3 - Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
As reflected in the accompanying consolidated financial statements, the Company had a net income of $247,434 and net cash used in operations of $74,150 for the year ended December 31, 2015; and a working capital deficit of $2,147,109 and stockholders´ equity of $523,443 as of December 31, 2015. Some of these factors raise substantial doubt about the Company’s ability to continue as a going concern.
The ability for the Company to continue its operations is primarily dependent on:
a) Continually engaging with new clients which over the years has become consistent.
b) Consummating and executing current engagements.
Whilst the Company´s current engagements are being consummated and executed, management may decide to raise further interim funding on a non-convertible basis.
The Company´s deferred revenue, $839,130 at December 31, 2015, is non-refundable hence once certain contractual milestones are achieved or contractual terms pass over time, as applicable, on each individual engagement a proportion of deferred revenue will become revenue for the Company and therefore no cash outlays are required for these liabilities.
The Company may also need to borrow funds with certain related parties, such as management, to sustain the Company’s existence. In addition, in the event that operating cash flows are slowed, the Company would reduce its overheads wherever possible.
F-8 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
It is important to note that the two largest debts (The Able Foundation loan & Eden loan) stated on our current liabilities are non-collateralized and non-convertible loans.
Finally, any monies owed to management can be forgiven if necessary.
Note 4 - Summary of Significant Accounting Policies
Principles of Consolidation
Global Equity International Inc. is the parent company of its 100% subsidiary Global Equity Partners Plc. and Global Equity Partners Plc. is the parent company of its 100% subsidiary, GE Professionals DMCC (Dubai). All significant inter-company accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-confirming events. Accordingly, the actual results could differ from those estimates. Significant estimates in the accompanying financial statements include allowance for doubtful accounts and loans, estimates of fair value of securities received for services, estimates of fair value of securities held, depreciation of fixed assets, valuation allowance on deferred tax assets, derivative valuations, and equity valuations for non-cash equity grants.
Risks and Uncertainties
The Company’s operations are subject to significant risk and uncertainties including financial, operational, competition and potential risk of business failure. The risk of social and governmental factors is also a concern since the Company is headquartered in Dubai.
Cash
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At December 31, 2015 and at December 31, 2014, respectively, the Company had no cash equivalents.
Accounts Receivable and Allowance for Doubtful Accounts
The Company recognizes accounts receivable in connection with the services provided. The Company recognizes an allowance for doubtful accounts based on an analysis of current receivables aging and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible.
F-9 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Foreign currency policy
The Company’s accounting policies related to the consolidation and accounting for foreign operations are as follows: The accompanying consolidated financial statements are presented in U.S. dollars. The functional currency of the Company’s Dubai subsidiary is the Arab Emirates Dirham (AED). All foreign currency balances and transactions are translated into United States dollars “$” and/or “USD” as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Equity transactions are translated using spot rate prevailing at each historical transaction date. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of our stockholders’ equity (deficit) as “Accumulated other comprehensive income (loss).” Since the AED is tagged to the U.S. dollar, translation gains and losses are always de minimis. Gains and losses resulting from foreign currency transactions are included in the statement of operations.
Investments
(A) Classification of Securities
Marketable Securities
At the time of the acquisition, a marketable security is designated as held-to-maturity, available-for-sale or trading, which depends on the ability and intent to hold such security to maturity. Securities classified as trading and available-for-sale are reported at fair value, while securities classified as held-to-maturity are reported at amortized cost.
Any unrealized gains and losses are reported as a component of other comprehensive income (loss). Realized gains (losses) are computed on a specific identification basis and are reflected in the statement of operations.
Cost Method Investments
Securities that are not classified as marketable securities are accounted for under the cost method. These securities are recorded at their original cost basis and are subject to impairment testing.
(B) Other than Temporary Impairment
The Company reviews its equity investment portfolio for any unrealized losses that would be deemed other than temporary and require the recognition of an impairment loss in income. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and the Company’s intent and ability to hold the investments. Management also considers the type of security, related-industry and sector performance, as well as published investment ratings and analyst reports, to evaluate its portfolio. Once a decline in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, the Company may incur future impairments. The Company did not record any other than temporary impairment during 2015 and recorded a $2,000 impairment in 2014.
F-10 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Fixed Assets
Fixed assets are stated at cost of acquisition less accumulated depreciation. Depreciation is provided based on estimated useful lives of the assets. Cost of improvements that substantially extend the useful lives of assets can be capitalized. Repairs and maintenance expenses are to be charged to expense when incurred. In case of sale or disposal of an asset, the cost and related accumulated depreciation are removed from the consolidated financial statements.
Beneficial Conversion Features
For conventional convertible debt where the rate of conversion is below market value, the Company records any “beneficial conversion feature” (“BCF”) intrinsic value as additional paid in capital and related debt discount.
When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt.
Debt issue costs and debt discount
The Company may pay debt issue costs, and record financing costs and debt discounts in connection with raising funds through the issuance of debt whether convertible or not. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Original issue discount
If debt is issued with an original issue discount, the original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.
Valuation of Derivative Instruments
ASC 815 “Derivatives and Hedging” requires that embedded derivative instruments be bifurcated and assessed, along with freestanding derivative instruments such as warrants, on their issuance date and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula. When a note containing a bifurcated embedded derivative is converted, the note balance and the related derivative balance are relieved and a gain or loss on extinguishment is recorded. At December 31, 2015 and 2014, the Company had a derivative liability balance of $0 and $695,447, respectively.
Revenue Recognition
We recognize revenue from the services we provide in accordance with ASC Topic 605, Revenue Recognition. ASC Topic 605 sets forth guidance as to when revenue is realized or realizable and earned, which is generally, when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been performed; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectability is reasonably assured. Generally, the contract terms for these services are relatively short in duration.
We receive consideration in the form of cash and/or securities.
F-11 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
We recognize cash consideration as revenues as the services are performed either on a pro rata basis or on a milestone basis.
Securities received as consideration are often earned at a point in time when the specified event occurs and the securities are issued to us. Therefore, we measure and recognize these securities received at fair value on the date of receipt. If securities are received in advance of completion of our services, the fair value will be recorded as deferred revenue and recognized as revenue as the services are competed.
All revenues are generated from clients whose operations are based outside of the United States.
At December 31, 2015 and 2014, the Company had the following concentrations of accounts receivables with customers:
Customer | December 31, 2015 | December 31, 2014 | ||||||
ACI | 0 | % | 100 | % |
For the years ended December 31, 2015 and 2014, the Company had the following concentrations of revenues with customers:
Customer | December 31, 2015 | December 31, 2014 | ||||||
VTH | 0 | % | 3.89 | % | ||||
AUT | 0 | % | 11.65 | % | ||||
ATC | 0 | % | 5.83 | % | ||||
PCI | 0 | % | 5.83 | % | ||||
YMD | 0 | % | 4.85 | % | ||||
IOA | 0 | % | 4.85 | % | ||||
STV | 0 | % | 4.85 | % | ||||
DSI | 0 | % | 22.33 | % | ||||
SAC | 1.81 | % | 4.85 | % | ||||
MHB | 0.91 | % | 19.42 | % | ||||
UNI | 6.10 | % | 11.65 | % | ||||
DUO | 31.25 | % | 0 | % | ||||
TAM | 1.81 | % | 0 | % | ||||
EER | 0.91 | % | 0 | % | ||||
MGP | 1.81 | % | 0 | % | ||||
PDI | 49.96 | % | 0 | % | ||||
QFS | 0.38 | % | 0 | % | ||||
INSCX | 0.60 | % | 0 | % | ||||
ALP | 4.46 | % | 0 | % | ||||
100 | % | 100 | % |
F-12 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Deferred Revenue
Deferred revenue represents fees that have been received by the Company for requested services that have not been completed. Following table illustrates the movement in deferred revenue during the years ended December 31, 2015 and 2014:
Balance, December 31, 2013 | $ | 247,000 | ||
New payments received in 2014 | 512,015 | |||
Revenue recognized during 2014 | (297,000 | ) | ||
Balance, December 31, 2014 | $ | 462,015 | ||
New payments received in 2015 | 2,099,520 | |||
Revenue recognized during 2015 | (1,722,405 | ) | ||
Balance, December 31, 2015 | $ | 839,130 |
Share-based payments
The Company recognizes all forms of share-based payments to employees, including stock option grants, warrants and restricted stock grants at their fair value on the grant date, which is based on the estimated number of awards that are ultimately expected to vest.
Share based payments, excluding restricted stock, are valued using a Black-Scholes pricing model. Share based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable as of the measurement date. Amounts received prior to the measurement date are adjusted to fair value at each reporting period until a measurement date is achieved. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period.
When computing fair value, the Company considered the following variables:
● | The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the share based payment in effect at the time of the grant. | |
● | The expected term is developed by management estimate. | |
● | The Company has not paid any dividends on common stock since inception and does not anticipate paying dividends on its common stock in the near future. | |
● | The expected volatility is based on management estimates which are based upon our historical volatility. | |
● | The forfeiture rate is based on historical experience. |
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is considered more likely than not that some portion, or all, of the deferred income tax assets will not be realized.
F-13 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
On November 15, 2010, the date of the reverse recapitalization, the Company became subject to U.S. federal and the state of Nevada income taxes. The Company files an unconsolidated income tax return to the tax authorities in U.S.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company will record interest and penalties related to unrecognized tax benefits in income tax expense. There were no penalties or interest for the years ended December 31, 2015 and 2014.
The Company may be subject to examination by the Internal Revenue Service (“IRS”) and state taxing authorities for 2012, 2013 and 2014 tax years.
The Company’s subsidiary, GEP, is incorporated under the laws of the Republic of Seychelles (“Seychelles”). A company is subject to Seychelles income tax if it does business in Seychelles. A company that is incorporated in Seychelles, but that does not do business in Seychelles, is not subject to income tax there. GEP did not do business in Seychelles for the years ended December 31, 2015 and 2014, and GEP does not intend to do business in Seychelles in the future. Accordingly, the Company is not subject to income tax in Seychelles for the years ended December 31, 2015 and 2014. All business activities were performed by GEP in Dubai for the years ended December 31, 2015 and December 31, 2014. Dubai does not have an income tax.
Earnings per Share
The basic net earnings (loss) per share are computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding during the period.
As at December 31, 2015, the Company had no common stock equivalents, which, if exercisable, would be dilutive. A separate computation of diluted earnings (loss) per share is not presented.
Fair Value of Financial Assets and Liabilities
The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability.
The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:
● | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
● | Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
● | Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. |
F-14 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The carrying amounts reported in the balance sheet for prepaid expenses, accounts receivable, accounts payable, accounts payable to related parties and loans payable to related parties, approximate fair value are based on the short-term nature of these instruments.
The Company measures its derivative liabilities at fair market value on a recurring basis and measures its non-marketable securities at fair value on a non-recurring basis. Consequently, the Company had gains and losses reported in the statement of operations.
The following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis at December 31, 2015 and December 31, 2014, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):
December 31, 2015 | December 31, 2014 | |||||||
Level 3 – Non-Marketable Securities – Non-recurring | $ | 2,650,471 | $ | 3,000 | ||||
Level 3 – Derivative liabilities – Recurring | $ | - | $ | (695,447 | ) |
During 2014, the Company recorded impairment of non-marketable securities of $2,000. There was no impairment of non-marketable securities in 2015.
The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value:
Marketable Securities — The Level 2 position consists of the Company’s investment in equity securities of stock held in publically traded companies. The valuation of these securities is based on significant inputs that are observable or can be derived from or corroborated by observable market data. These valuations are typically based on quoted prices in active markets. The Company´s investments in equity securities are in relatively inactive markets.
Non-Marketable Securities at Fair Value on a Nonrecurring Basis — Certain assets are measured at fair value on a nonrecurring basis. The level 3 position consist of investments accounted for under the cost method. The Level 3 position consists of investments in equity securities held in private companies.
Management believes that an “other-than-temporary impairment” would be justified, as according to ASC 320-10 an investment is considered impaired when the fair value of an investment is less than its amortized cost basis. The impairment is considered either temporary or other-than-temporary. The accounting literature does not define other-than-temporary. It does, however, state that other-than-temporary does not mean permanent, although, all permanent impairments are considered other-than-temporary. The literature does provide some examples of factors, which may be indicative of an “other-than-temporary impairment”, such as:
● | the length of time and extent to which market value has been less than cost; | |
● | the financial condition and near-term prospects of the issuer; and | |
● | the intent and ability of the holder to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value. |
F-15 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Management believes that the fair value of its investment has been correctly measured, as the length of time that the stock has been less than cost is nominal.
Changes in Level 3 assets measured at fair value for the years ended December 31, 2015 and 2014 were as follows:
Balance, December 31, 2013 | $ | 5,000 | ||
Realized and unrealized gains (losses) | - | |||
Purchases, sales and settlements | - | |||
Impairment loss | (2,000 | ) | ||
Balance, December 31, 2014 | 3,000 | |||
Realized and unrealized gains (losses) | - | |||
Purchases, sales and settlements | 2,647,471 | |||
Impairment loss | - | |||
Balance, December 31, 2015 | $ | 2,650,471 |
Derivative liabilities — These instruments result from certain of our notes, which are convertible, based on a discount to the market value of our common stock. These instruments were valued using pricing models, which incorporate the Company’s stock price, volatility, U.S. risk free rate, dividend rate and estimated life.
The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (derivative liabilities) for the year ended December 31, 2015.
Balance, December 31, 2014 | $ | 695,447 | ||
Initial derivatives recorded from 1/1/2015 to 12/31/2015 | - | |||
Changes in fair value from 1/1/2015 to 12/31/2015 | 407,482 | |||
Reduction of derivative from debt conversions or paybacks | (1,102,929 | ) | ||
Reclassifications to/from APIC for the change in status | - | |||
Balance, December 31, 2015 | $ | - |
Recent Accounting Pronouncements
There are no new accounting pronouncements that have any impact on the Company’s consolidated financial statements other than discussed below:
In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-03,“Simplifying the Presentation of Debt Issuance Costs,” which changes the presentation of debt issuance costs in financial statements. Under this guidance such costs would be presented as a direct deduction from the related debt liability rather than as an asset. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015. The Company is currently evaluating the impact this guidance will have on its Consolidated Balance Sheet.
F-16 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Note 5 - Loans Receivable
On March 22, 2013, the Company granted a loan to a third party, Dreamscapes Properties International Inc. The principal amount loaned was $6,000, the agreed interest rate was 5% per annum, and the loan would have to be repaid no later than one year from the date that the loan was granted. During the year ended December 31, 2015, the company wrote off $6,000 as this amount was deemed as uncollectible.
In October 2014, the Company granted a loan to another third party. The principal amount loaned was $4,825. It was agreed that no interest would be paid and that the loan would have to be repaid no later than one year from the date that the loan was granted. During the year ended December 31, 2015, the company wrote off $4,825 as it was deemed uncollectible.
Note 6 - Investments
The Company holds following common equity securities in private and reporting companies:
12/31/2015 | 12/31/2014 | |||||||||||||||||
Company | No. of Shares | Book value | No. of Shares | Book value | Status | |||||||||||||
M1 Lux AG | 2,000,000 | $ | - | 2,000,000 | $ | - | Private Company | |||||||||||
Monkey Rock Group Inc. | 1,500,000 | $ | - | 1,500,000 | $ | - | Reporting Company – OTC | |||||||||||
Voz Mobile Cloud Limited | 3,200,000 | $ | - | 3,200,000 | $ | - | Private Company | |||||||||||
Arrow Cars International Inc. | 3,000,000 | $ | 3,000 | 3,000,000 | $ | 3,000 | Reporting Company – OTC | |||||||||||
Direct Security Integration Inc. | 400,000 | $ | - | 400,000 | $ | - | Private Company | |||||||||||
Duo World Inc. | 3,460,000 | $ | 865,000 | - | $ | - | Private Company | |||||||||||
Primesite Developments Inc. | 5,606,521 | $ | 1,781,521 | - | $ | - | Private Company | |||||||||||
19,166,521 | $ | 2,649,521 | 10,100,000 | $ | 3,000 |
The Company holds following preferred equity securities in private companies:
12/31/2015 | 12/31/2014 | |||||||||||||||||
Company | No. of Shares | Book value | No. of Shares | Book value | Status | |||||||||||||
Duo World Inc. | 500,000 | $ | 500 | - | $ | - | Private Company | |||||||||||
Primesite Developments Inc. | 450,000 | $ | 450 | - | $ | - | Private Company | |||||||||||
950,000 | $ | 950 | - | $ | - |
At June 30, 2013, the Company received 2,000,000 shares from a private company and client having a cost of $2,000 that is treated as a cost method investment. The value of the cost method investment pertains to the receipt of 8.55% of the common stock in a private company in which the best evidence of value was the services rendered.
At December 31, 2014, there were identifiable events or changes in circumstances that had a significant adverse effect on the value of one of the investments; hence, the Company impaired $2,000 of the investments
On April 28, 2015, the Company received 3,460,000 common shares from a private company and client having a fair market value of $865,000 that has been treated as a cost method investment. The value of the cost method investment pertains to the receipt of 9.09% of the common stock in a private company in which the best evidence of value was the last available price at which shares were sold in a private placement. On April 28, 2015, the Company received 500,000 preferred shares from the same private company and client having a fair market value of $500 that is treated as a cost method investment. The value of the cost method investment pertains to the receipt of 10% of the preferred stock in this private company in which the best evidence of value was the services rendered.
F-17 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
On September 24, 2015, the Company received 4,500,000 common shares from a private company and client having a fair market value of $675,000 that is treated as a cost method investment. The value of the cost method investment pertains to partial receipt of 5% of the common stock in a private company in which the best evidence of value was based on the net asset value of the private company. On September 24, 2015, the Company also received 450,000 preferred shares from the same private company and client having a fair market value of $450 that is treated as a cost method investment. The value of the cost method investment pertains to the receipt of the preferred stock (10% of 4,500,000 common shares received) in the aforementioned private company in which the best evidence of value was the services rendered. On December 14, 2015, the Company further received 1,106,521 common shares from the same private company and client having a fair market value of $1,106,521 that is treated as a cost method investment. The value of the cost method investment pertains to partial receipt of 5% of the common stock in a private company in which the best evidence of value was based on the debt conversion price of the private company.
At December 31, 2015, there were no identifiable events or changes in circumstances that had a significant adverse effect on the value of the investments; hence, no impairment is required as at December 31, 2015.
Note 7 - Fixed Assets
Following table reflects net book value of fixed assets as at December 31, 2015 and 2014:
12/31/2015 | 12/31/2014 | Useful Life | ||||||||
Furniture and Equipment | $ | 37,204 | $ | 36,095 | 3 to 5 years | |||||
Accumulated depreciation | $ | (17,123 | ) | $ | (5,871 | ) | ||||
Net fixed assets | $ | 20,081 | $ | 30,224 |
Depreciation expense for the years ended December 31, 2015 and 2014 was $11,251 and $4,372, respectively.
Note 8 - Debt & Accounts Payables
(A) Accounts payable and accrued liabilities
The following table represents breakdown of accounts payable as of December 31, 2015 and December 31, 2014, respectively:
12/31/2015 | 12/31/2014 | |||||||
Accrued salaries and benefits | $ | 79,386 | $ | 13,658 | ||||
Other payables & accrued liabilities | 293,607 | 100,533 | ||||||
$ | 372,993 | $ | 114,191 |
On September 9, 2015, one of the employees of the Company decided to convert his accrued salary and commission balance to the common shares of the Company at $0.01 per share. As a result of this conversion, the Company issued 5,500,000 common shares having a fair value of $0.014 per share or $77,000 to the employee for his accrued salary and bonus of $55,000. As a result, $22,000 was recognized as net loss on conversion into stock.
F-18 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
On September 10, 2015, another employee of the Company decided to convert his accrued salary and commission balance to the common shares of the Company at $0.00735 per share. As a result of this conversion, the Company issued 10,749,000 common shares having a fair value of $0.0127 per share or $136,512 to the employee for his accrued salary and bonus of $79,000. As a result, $57,512 was recognized as net loss on conversion into stock.
On December 4, 2015, one of the employees of the Company decided to convert his accrued salary and bonus balance to the common shares of the Company at $0.0233 per share. Because of this conversion, the Company issued 892,790 common shares having a fair value of $0.0233 per share or $20,802, based on the quoted trading price, to the employee for his accrued salary and bonus of $20,000 and expenses payable of $802. As a result, no gain/loss was recognized on conversion into stock.
(B) Accounts payable and accrued liabilities – related parties
The following table represents the accounts payable to related parties as of December 31, 2015 and December 31, 2014, respectively:
12/31/2015 | 12/31/2014 | |||||||
Salaries | $ | 152,875 | $ | 353,913 | ||||
Expenses | 50,734 | 7,071 | ||||||
$ | 203,609 | $ | 360,984 |
On August 27, 2015, all of the officers and directors of the Company decided to convert their accrued salaries balance amounting to $398,156 to the common shares of the Company at $0.0025 per share, which is 50% of the average 20 days closing price prior to the conversion. Following is the breakdown of this conversion:
● | The Company issued 69,076,922 common shares at $0.0025 per share having a fair value of $0.0064 per share or $442,092 to Mr. Enzo Taddei for his accrued salary balance of $173,901. As a result, $268,191 was recognized as net loss on conversion into stock. | |
● | The Company issued 42,127,492 common shares at $0.0025 per share having a fair value of $0.0064 per share or $269,616 to Mr. Peter Smith for his accrued salary balance of $106,056. As a result, $163,560 was recognized as net loss on conversion into stock. | |
● | The Company issued 46,951,071 common shares at $0.0025 per share having a fair value of $0.0064 per share or $300,487 to Mr. Patrick Dolan for his accrued salary balance of $118,199. As a result, $182,288 was recognized as net loss on conversion into stock. |
(C) | Related party – short term loans payable |
The Company received loans from two of its officers and directors. The loans were non-interest bearing, unsecured and due on demand. The following table represents the loans payable activity as of December 31, 2015 and 2014:
Balance, December 31, 2013 | $ | 57,194 | ||
Proceeds from loans | 1,401 | |||
Repayments | - | |||
Balance, December 31, 2014 | $ | 58,595 | ||
Proceeds from loans | 48,422 | |||
Repayments | (5,500 | ) | ||
Converted to common stock | (101,517 | ) | ||
Balance, December 31, 2015 | $ | - |
F-19 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
On August 27, 2015, both of the officers and directors of the Company decided to convert their short-term loans payable balance amounting to $101,517 to common shares of the Company at $0.0025 per share, which is 50% of the average 20 days closing price prior to the conversion. Following is the breakdown of this conversion:
● | The Company issued 11,776,756 common shares at $0.0025 per share having a fair value of $0.0064 per share or $75,371 to Mr. Enzo Taddei for his loan payable balance of $29,648. As a result, $45,723 was recognized as net loss on conversion into stock. | |
● | The Company issued 28,547,822 common shares at $0.0025 per share having a fair value of $0.0064 per share or $182,706 to Mr. Peter Smith for his loan payable balance of $71,869. As a result, $110,837 was recognized as net loss on conversion into stock. |
(D) Related party – short term convertible notes
The Company had accrued salary to the officers and directors of the Company based on the terms of the employment agreements entered into with each officer. As at December 31, 2012, $209,475 was due to the Chief Executive Officer and $115,000 was due to the Chief Financial Officer. During the quarter ended March 31, 2013, the Company converted these amounts to Convertible Loans Payable. These amounts had a term of two years from March 31, 2013 and were payable on demand having accrued interest at 10% on the loan period. The agreements also gave an option to the officers of the Company to convert all or part of the debt that the Company maintains with them into restricted shares at $1.20 per share.
On November 15, 2014, the board of directors agreed to modify the conversion terms of the loan and extend the term until December 31, 2015. The new conversion terms are as follows: 50% of the average 10 day closing price prior to the conversion. This modification caused the initial notes to be deemed extinguished. The company has accounted for the corresponding debt discount, derivate liability, and gain on extinguishment attached to these notes.
The principal balance outstanding of the loan payable account (net of unamortized debt discount of $268,189) as at December 31, 2014 was $33,800. During the year ended December 31, 2015, the Company converted the full amount of convertible loans outstanding to its officers and directors amounting to $301,989 and related accrued interest of $21,386 into its common stock by issuing 303,499,047 common shares, which makes the outstanding convertible loan and interest payable of $0 as at December 31, 2015. As a result, $119,322 was recognized as gain on conversion into stock.
During the year ended December 31, 2015, total interest of $17,297 was accrued and a total of $268,189 debt discount was amortized leaving an unamortized balance of $0. The fair value of derivative liability as on December 31, 2015 is $0, as the debt was fully converted into shares, thereby recognizing a net loss on derivative liability for the year ended December 31, 2015 of $206,765.
F-20 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(E) Notes payable
Following is the summary of all non-convertible notes, net of debt discount, including the accrued interest as at December 31, 2014:
Date of Note | Principal (net of debt discount) | Accrued Interest | Total payable | |||||||||
October 9, 2013 | $ | 120,420 | $ | 106,196 | $ | 226,616 | ||||||
October 17, 2013 | 319,598 | 429,799 | 749,397 | |||||||||
November 26, 2013 | - | 37,971 | 37,971 | |||||||||
Balance at December 31, 2014 | $ | 440,018 | $ | 573,966 | $ | 1,013,984 |
Following is the summary of all non-convertible notes, net of debt discount, including the accrued interest as at December 31, 2015:
Date of Note | Principal (net of debt discount) | Accrued Interest | Total payable | |||||||||
October 9, 2013 | $ | 120,420 | $ | 106,196 | $ | 226,616 | ||||||
October 17, 2013 | 319,598 | 160,402 | 480,000 | |||||||||
November 26, 2013 | - | 37,971 | 37,971 | |||||||||
August 27, 2015 | 123,333 | - | 123,333 | |||||||||
Balance at December 31, 2015 | $ | 563,351 | $ | 304,569 | $ | 867,920 |
● | On October 9, 2013, the Company secured a two month loan for GBP 75,000 (equivalent to $120,420) with the understanding that the Company will issue 10,000 common restricted shares, issued to the lender on December 7, 2013, and also repay 35,000 GBP (equivalent to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time, the Company compensated the lender with an additional 20,000 common restricted shares and for this the lender agreed to a five month extension. This stock compensation was issued to the lender also on December 12, 2013. This loan is currently in default. Total accrued interest as at December 31, 2015 is $106,196. The Company also accrued $184,656 provision for potential damages due to the ongoing litigation in the Dubai Courts as of December 31, 2015 which is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheet. |
Loan granted in 2013 | $ | 120,420 | ||
Interest accrued in 2013 | 56,196 | |||
Balance at December 31, 2013 | $ | 176,616 | ||
Interest accrued in 2014 | 50,000 | |||
Balance at December 31, 2014 | $ | 226,616 | ||
Interest accrued in 2015 | - | |||
Potential damages accrued in 2015 | 184,656 | |||
Balance at December 31, 2015 | $ | 411,272 |
● | On October 17, 2013, the Company secured a three-month bridge loan for 200,000 GBP (equivalent to $319,598) with the agreement to repay the principal plus 5% per month interest on or before January 18, 2014. The note holder received, as a form of guarantee, 1,600,000 shares of Direct Security Integration Inc. and the note holder is currently trying to sell these shares. The shares used as a form of guarantee formed part of the assets of our Company. |
On September 18, 2015, the Company and the note holder agreed to amend the previous terms of the agreement and both parties agreed on the new terms whereby the company is now liable to pay $500,000 as full and final payment of the October 17, 2013 loan principal, accrued interest, and all other related penalties. This repayment will not accrue any further interest or penalties. As a result, the Company has reversed the excess accrued interest and monitoring fee payable amounting to $660,578 recognized as a gain on settlement; leaving the principal loan balance of $319,598 and accrued interest balance $180,402 of as on September 30, 2015.
F-21 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
On December 21, 2015, the company repaid first installment of the accrued interest amounting to $20,000; leaving the accrued interest balance of $160,402 and principal loan balance $319,598 of as on December 31, 2015. The December 31, 2015 installment of $50,000, as per the amended agreement, has not been paid and the first installment in 2016 is not due until March 31, 2016.
Loan granted in 2013 | $ | 319,598 | ||
Interest accrued in 2013 | 39,602 | |||
Balance at December 31, 2013 | $ | 359,200 | ||
Interest accrued in 2014 | 390,197 | |||
Balance at December 31, 2014 | $ | 749,397 | ||
Monitoring fee accrual | 124,175 | |||
Interest accrued in 2015 | 287,006 | |||
Interest repayment | (20,000 | ) | ||
Excess interest and monitoring fee gain | (660,578 | ) | ||
Balance at December 31, 2015 | $ | 480,000 |
● | On August 27, 2015, the Company secured a six month non-convertible loan for $135,000 carrying an original issue discount of $30,000. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs. The interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the year ended December 31, 2015, $3,333 of the debt issuance costs and $20,000 of the debt discount balance was amortized to interest expense, leaving an unamortized issue cost and discount balance of $11,667. |
Principal loan amount | $ | 135,000 | ||
Original issue discount | (30,000 | ) | ||
Issuance costs | (5,000 | ) | ||
Amortization of OID and issuance costs in 2015 | 23,333 | |||
Balance at December 31, 2015 | $ | 123,333 | ||
(Net of unamortized discount and issue costs of $11,667) |
(F) Convertible notes and derivative liability
We have evaluated the terms and conditions of the notes. Because the economic characteristics and risks of the equity linked conversion options are not clearly and closely related to a debt-type host, the conversion features require classification and measurement as derivative financial instruments. The accounting treatment of derivative financial instruments requires that the Company record the initial fair value of the derivative first by allocating the fair value of the embedded derivative as a reduction to the face value of the debt recorded as a contra liability or debt discount to be accreted over the term of the note. On each reporting date, the fair value of the embedded derivative is calculated with changes in value recorded to other income (expense).
F-22 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
● | LG Capital LLC: |
On May 1, 2014, the Company issued a $100,000 convertible promissory note (the “LG Note”) to LG Capital Funding, LLC, a New York limited liability company (the “Lender”). The LG Note provided up to an aggregate of $100,000 in gross proceeds. The LG Note matured on May 1, 2015, having accrued interest of 8% and was convertible into shares of common stock any time 180 days after May 1, 2014, at a conversion price equal to 60% of lowest daily VWAP of the Common Stock as reported on the National Quotations Bureau OTCQB which the Company’s shares were traded or any exchange upon which the Common Stock might be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion was received by the Company. Accrued interest was paid back in shares of common stock at the discretion of the Lender pursuant to the conversion terms above. The first LG Note may be prepaid within 180 days with penalty. The note may not be prepaid after the 180th day.
The principal amount of $50,000 under the second note was to be received by the Company no later than January 1, 2015. All principal under this Note was due and payable no later than July 1, 2015. This Full Recourse Note would have accrued simple interest at the rate of 8%. On December 19, 2014 the note holder decided not to lend any further amounts against the second note, so this amount was not received by the company. As such, the second note and corresponding subscription receivable was cancelled during the year ended December 31, 2014.
The fair value of the derivative liability as at December 31, 2014, was determined using the Black Scholes option pricing model with a quoted market price of $0.0080, a conversion price of $0.00465, expected volatility of 474.25%, no expected dividends, a remaining term of 4 months and a risk-free interest rate of 0.04% resulting in a fair value per share of $0.0070 multiplied by the 11,327,736 shares that would be issued if the Note was exercised on the Effective Date. The fair value of the derivative liability as at December 31, 2015, was nil as this loan was fully converted into shares during the year ended December 31, 2015.
During the year ended December 31, 2014, a total interest of $2,677 was accrued and a total of $83,423 debt discount was amortized leaving an unamortized balance of $16,577. The fair value of derivative liability as on December 31, 2014 was $78,874, thereby recognizing a net loss of ($25,547) on derivative liability during the year ended December 31, 2014.
During the year ended December 31, 2015, the Company fully repaid $50,000 in principal and $4,024 of accrued interest by the issuance of 65,283,160 shares of common stock priced between $0.0011 and $0.0067per share. As a result, $6,757 was recognized as net gain on conversion into stock.
During the year ended December 31, 2015, total interest of $1,424 was accrued and a total of $16,575 debt discount was amortized leaving an unamortized balance of $0. The company recognized a net gain on derivative liability during the year ended December 31, 2015, of $61,641. As of December 31, 2015, this convertible debt has been fully extinguished.
● | Adar Bay LLC: |
On May 1, 2014, the Company entered into a Securities Purchase Agreement with Adar Bay, LLC (“Adar Bay”) providing for the purchase of a Convertible Redeemable Note (the “AB Note”) in the aggregate principal amount of $100,000. The AB Note provided up to an aggregate principal amount of $100,000 (with the first note being in the amount of $50,000 and the second note being in the amount of $50,000 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note. The first of the two notes (the “First Note”) shall be paid for by the Buyer as set forth herein. The second note (the “Second Note”) shall initially be paid for by the issuance of an offsetting $50,000 secured note issued to the Company by the Buyer (“Buyer Note”), provided that prior to conversion of the Second Note, the Buyer must have paid off the Buyer Note in cash such that the Second Note may not be converted until it has been paid for in cash.
F-23 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The first note matures on May 1, 2015, accrues interest of 8% and is convertible into shares of common stock any time 180 days after May 1, 2014, at a conversion price equal to 60% of lowest daily VWAP of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company. Accrued interest shall be paid in shares of common stock at any time at the discretion of the Lender pursuant to the conversion terms above. The First Note may be prepaid within 180 days with penalty. The first note may not be prepaid after the 180th day.
The principal amount of $50,000 under the second note was to be received by the Company no later than January 1, 2015. All principal under this Note would be due and payable no later than July 1, 2015. This Full Recourse Note would have accrued simple interest at the rate of 8%. This amount was not received and as on December 24, 2014 the note holder decided not to lend any further amounts. As such the second note and corresponding subscription receivable was cancelled during the year ended December 31, 2014.
The fair value of the derivative liability as at December 31, 2014, was determined using the Black Scholes option pricing model with a quoted market price of $0.0080, a conversion price of $0.00465, expected volatility of 474.25%, no expected dividends, over remaining term of 4 months and a risk-free interest rate of 0.040% resulting in a fair value per share of $0.0070 multiplied by the 8,403,170 shares that would be issued if the Note was exercised on the Effective Date. The fair value of the derivative liability as at December 31, 2015 was nil as this loan was fully converted into shares during the year ended December 31, 2015.
During the quarter ended December 31, 2014, after the initial 180 days, the Company repaid $13,000 in principal by the issuance of 518,498 shares of common stock priced between $0.08 to $0.0844 per share. As a result, a total of $13,000 of debt discount was amortized and $27,364 was recognized as loss on conversion into stock.
During the year ended December 31, 2014, a total interest of $2,518 was accrued and a total of $85,579 debt discount was amortized leaving an unamortized balance of $14,421. The fair value of derivative liability as on December 31, 2014 was $58,511, thereby recognizing a net loss of ($38,056) on derivative liability during the year ended December 31, 2014.
During the year ended December 31, 2015, the Company fully repaid $37,000 in principal and $3,171 of accrued interest by the issuance of 24,570,088 shares of common stock priced between $0.0024 and $0.0057 per share. As a result, $14,641was recognized as net gain on conversion into stock.
During the year ended December 31, 2015, total interest of $652 was accrued and a total of $14,421 debt discount was amortized leaving an unamortized balance of $0. The company recognized a net loss on derivative liability during the year ended December 31, 2015 of $(157). As of December 31, 2015, this convertible debt has been fully extinguished.
● | JMJ Financial |
On June 12, 2014, the Company issued a $250,000 convertible promissory note (the “JMJ Note”) to JMJ Financial, a Nevada sole proprietorship (the “Lender”). The JMJ Note provides up to an aggregate of $250,000 in gross proceeds. The JMJ Note matures on June 12, 2016, accrues interest of 12%, and is convertible into shares of common stock any time after the agreement was signed. The Conversion Price is the lesser of $.30 or 60% of the lowest trade price in the 25 trading days previous to the conversion. The Note also contemplated a further 10% discount to market if the shares were not deliverable by Deposits/Withdrawals at Custodian (DWAC). Accrued interest shall be paid in shares of common stock at any time at the discretion of the Lender pursuant to the conversion terms above. The Company opted to receive only $55,000 of the possible $250,000.
F-24 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
During the year ended December 31, 2014, after the initial 90 days, the Company repaid $7,500 in principal by issuance of 600,000 shares of common stock at $0.0300 per share. As a result, a total of $7,500 of debt discount was amortized and $6,078 was recognized as loss on conversion into stock. The fair value of the derivative liability as at December 31, 2015 was nil as this loan was fully converted into stock during the year ended December 31, 2015.
During the year ended December 31, 2014, a total interest of $13,972, other fees of $4,400 were incurred, an accrued interest of $18,372 was recognized and a total of $20,194 debt discount was amortized leaving an unamortized balance of $34,807. The fair value of derivative liability as on December 31, 2014 was $112,941, thereby recognizing a net loss of ($62,363) on derivative liability during the year ended December 31, 2014.
During the year ended December 31, 2015, the Company fully repaid $47,500 in principal and $18,372 of accrued original issue discount by the issuance of 103,313,129 shares of common stock priced between $0.0010 and $0.0065 per share. As a result, $57,039 was recognized as net gain on conversion into stock.
During the year ended December 31, 2015, a total debt discount of $34,805 was amortized leaving an unamortized balance of $0. The company recognized a net gain on derivative liability during the year ended December 31, 2015 of $190,844. As of December 31, 2015, this convertible debt has been fully extinguished.
● | Asher Enterprises Inc. |
On September 9, 2013, the Company secured a nine-month convertible loan for $32,500 with an 8% interest rate due on June 11, 2014. The terms of the conversion will be a 42% discount to market based on an average price calculated on the 10 trading days prior to the conversion date. If the Company opts to pay the loan back on or before the 9-month period ends, hence not converting the debt into equity; borrower shall make payment to the holder of an amount in cash (the “Optional Prepayment Amount”) equal to 130% of total amount due inclusive of principal and interest accrued. Between October and December of 2014, the note holder converted the loan by issuing 1,993,232 common shares of value $433,402 and recognizing a loss of $336,507 on conversion into stock.
During the year ended December 31, 2014, a total interest of $2,855 was paid and a total of $53,000 debt discount was amortized leaving an unamortized balance of $0. The fair value of derivative liability as on December 31, 2014 was $0, thereby recognizing a net gain of $9,105 on derivative liability during the year ended December 31, 2014.
● | KMB Worldwide Inc. |
The Company entered into Securities Purchase Agreement (the “Agreement”), dated as of September 25, 2014, with KMB Worldwide Inc. On October 2, 2014, the Company received $32,500 from a secured nine month convertible loan signed on September 29, 2014. The loan carried an 8% interest rate and was due on June 29, 2015. The terms of the conversion included a 42% discount to market based on an average price calculated on the 10 trading days prior to the conversion date. If the Company opted to pay the loan back on or before 180 days, hence not converting the debt into equity, borrower should make payment to the holder of an amount in cash equal to 130% of total amount due inclusive of principal and interest accrued. On March 24, 2015, this note, the 8% per annum accrued interest and 130% premium was fully paid back to the note holder.
The fair value of the derivative liability as at December 31, 2014, was determined using the Black Scholes option pricing model with a quoted market price of $0.0080, a conversion price of $0.0045, expected volatility of 401.89%, no expected dividends, over remaining term of 6 months and a risk-free interest rate of 0.12% resulting in a fair value per share of $0.0071 multiplied by the 7,294,445 shares that would be issued if the Note was exercised on the Effective Date.
F-25 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
During the year ended December 31, 2014, a total interest of $657 was accrued and a total of $11,240 debt discount was amortized leaving an unamortized balance of $21,259. The fair value of derivative liability as on December 31, 2014 was $51,613, thereby recognizing a net loss of ($19,112) on derivative liability during the year ended December 31, 2014.
During the year ended December 31, 2015, total interest of $10,325 was accrued and a total of $21,259 debt discount was amortized leaving an unamortized balance of $0. The fair value of the derivative liability as of December 31, 2015 was $0 as this loan was paid in full during the quarter ended March 31, 2015 and the company recognized a gain of $51,613 on extinguishment of derivative liability balance.
● | Peter J. Smith |
During the quarter ended March 31, 2013, the Company converted $209,475 of unpaid salary to a Convertible Loan Payable. This amount will be advanced for a term of two years, is repayable on demand, and will accrue interest at 10% on the loan period. The agreement also gave an option to the company´s CEO to convert all or part of the debt that the Company maintains with them into restricted shares at $1.20 per share.
On November 15, 2014, the board of directors agreed to modify the conversion terms of the loan and extend the term until December 31, 2015. The new conversion terms are now as follows: 50% of the average 10 day closing price prior to the conversion. This modification caused the initial note to be deemed extinguished. The Company has accounted for the corresponding debt discount, derivative liability, and gain on extinguishment attached to the note.
The fair value of the derivative liability as at December 31, 2014, was determined using the Black Scholes option pricing model with a quoted market price of $0.0080, a conversion price of $0.0063 expected volatility of 368.91%, no expected dividends, over remaining term of 1 year and a risk-free interest rate of 0.25% resulting in a fair value per share of $0.0075 multiplied by the 33,695,784 shares that would be issued if the Note was exercised on the Effective Date.
During the year ended December 31, 2014, the Company incurred interest expense of $21,037 and amortized $21,820 of debt discount for this convertible loan note leaving an unamortized balance of $173,138. The fair value of derivative liability as on December 31, 2014 was $254,043, thereby recognizing a net loss of ($59,085) on derivative liability during the year ended December 31, 2014.
During the year ended December 31, 2015, the Company converted full amount of convertible loan outstanding to Mr. Peter Smith into its common stock, which makes the outstanding convertible loan payable of $0 as at December 31, 2015.
During the year ended December 31, 2015, total interest of $11,555 was accrued and a total of $173,138 debt discount was amortized leaving an unamortized balance of $0. The fair value of derivative liability as on December 31, 2015, is recorded at $0 as the debt was fully converted into shares, thereby recognizing a net gain on derivative liability during the year ended December 31, 2015, of $128,481.
F-26 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
● | Enzo Taddei |
During the quarter ended March 31, 2013, the Company converted $115,000 of unpaid salary to a Convertible Loan Payable. This amount will be advanced for a term of two years and is repayable on demand and will accrue interest at 10% on the loan period. The agreement also gave an option to the company´s CFO to convert all or part of the debt that the Company maintains with them into restricted shares at $1.20 per share.
On November 15, 2014, the board of directors agreed to modify the conversion terms of the loan and extend the term until December 31, 2015. The new conversion terms are now as follows: 50% of the average 10 day closing price prior to the conversion. This modification caused the initial note to be deemed extinguished. The company has accounted for the corresponding debt discount, derivate liability, and gain on extinguishment attached to the note.
The fair value of the derivative liability as at December 31, 2014, was determined using the Black Scholes option pricing model with a quoted market price of $0.0080, a conversion price of $0.0063 expected volatility of 368.91%, no expected dividends, over remaining term of 1 year and a risk-free interest rate of 0.25% resulting in a fair value per share of $0.0075 multiplied by the 18,498,700 shares that would be issued if the Note was exercised on the Effective Date.
During the year ended December 31, 2014, the Company incurred $11,500 in interest expense and amortized $11,979 of debt discount for this convertible loan note leaving an unamortized balance of $95,051. The fair value of derivative liability as on December 31, 2014 was $139,467, thereby recognizing a net loss of ($32,437) on derivative liability during the year ended December 31, 2014.
During the year ended December 31, 2015, the Company converted full amount of convertible loan outstanding to Mr. Enzo Taddei into its common stock, which makes the outstanding convertible loan payable of $0 as at December 31, 2015.
During the year ended December 31, 2015, a total interest of $5,742 was accrued and a total of $95,052 debt discount was amortized leaving an unamortized balance of $0. The fair value of derivative liability as on December 31, 2015 is recorded at $0 as the debt was fully converted into shares, thereby recognizing a net loss on derivative liability during the year ended December 31, 2015 of $78,284.
Note 9 - Income Taxes
The income tax provision differs from the amount of tax determined by applying the US federal statutory rate of 35% as follows:
2015 | 2014 | |||||||
Income Tax provision (benefit) at statutory rate: | $ | 86,603 | $ | (777,745 | ) | |||
Increase (decrease) in income tax due to: | ||||||||
Non-Taxable foreign earnings / losses | (402,915 | ) | 328,503 | |||||
Amortization of debt discount | 30,473 | 93,008 | ||||||
Loss on derivative liability | 88,315 | 47,591 | ||||||
Loss on conversion of notes | 328,464 | 129,482 | ||||||
Stock based compensation | 54,539 | 65,196 | ||||||
Other non-deductible expenses | - | 509 | ||||||
Change in valuation allowance | (185,478 | ) | 113,457 | |||||
Total | $ | - | $ | - |
F-27 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income taxes.
Net deferred tax assets and liabilities are comprised of the following:
2015 | 2014 | |||||||
Deferred tax assets (liabilities), current | $ | - | $ | - | ||||
Deferred tax assets (liabilities), non-current | ||||||||
Net operating loss carryforward | $ | 66,190 | $ | 251,668 | ||||
Valuation allowance | $ | (66,190 | ) | $ | (251,668 | ) | ||
$ | - | $ | - | |||||
Net deferred tax assets (liabilities) | $ | - | $ | - | ||||
Non-current assets (liabilities) | $ | - | $ | - | ||||
$ | - | $ | - |
The US parent entity´s expenses are funded by the foreign subsidiaries through a management fee which is included in the US parent´s unconsolidated US annual income tax return as taxable revenues.
The Company has not recorded deferred income taxes applicable to undistributed earnings of the foreign subsidiaries because there are cumulative losses in those subsidiaries through December 31, 2015. In the future the Company does not intend to record deferred income taxes applicable to undistributed future earnings of the foreign subsidiaries because it is the present intention of management to reinvest the undistributed earnings indefinitely in those foreign subsidiaries.
In assessing the realizability of deferred tax assets, management considers that whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of December 31, 2015 and 2014, based upon the levels of historical taxable income and the limited experience of the Company, the Company believes that it is more-likely-than-not that it will not be able to realize the benefits of some or all of these deductible differences. Accordingly, a valuation allowance of approximately $(66,190) and $(251,668) has been provided in the accompanying financial statements as of December 31, 2015 and 2014, respectively.
At December 31, 2015, the Company had approximately $189,000 of US net operating loss carryforwards that will expire starting in 2033.
The Company is not subject to any foreign income taxes for the years ended December 31, 2015 and 2014. The Company may be subject to examination by the Internal Revenue Service (“IRS”) and state taxing authorities for 2012, 2013 and 2014 tax years.
Note 10 - Stockholders’ Equity (Deficit)
(A) Redeemable Preferred Stock
On November 30, 2011, the Company authorized and designated 5,000,000 Series “A” convertible preferred shares. On November 13, 2012, the Company’s board of directors approved an amendment to the Certificate of Designation; to amend the voting rights and conversion rights of the Company’s Series “A” preferred shares as follows:
● | Voting Rights: 10 votes per share (votes along with common stock); | |
● | Conversion Rights: Each share of Series “A” Preferred is convertible into ten (10) shares of common stock 1 day after the second anniversary of issuance; | |
● | Dividend Rights: None; | |
● | Liquidation Rights: None |
F-28 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Under Regulation S-X, Rule 5-02-28, preferred stock must be classified outside of stockholders’ equity when the stock is:
● | Redeemable at a fixed or determinable price on a fixed or determinable date, | |
● | Redeemable at the option of the holder, or | |
● | Redeemable based on conditions outside the control of the issuer. |
The Series “A”, convertible preferred stock was redeemable on December 1, 2014 and it was presented on the balance sheets as “Redeemable Preferred Stock” in a manner consistent with temporary equity as at December 31, 2014. There were no other features associated with this class of redeemable preferred stock, which require disclosure. As at December 31, 2014, there were 1,983,332 series “A” preferred shares issued and outstanding. The carrying amount and redemption amount was $1,020,000 as at December 31, 2014.
On May 19, 2015, the board of directors agreed to the non-redemption and returned the 1,983,332 series “A” preferred shares of the Company to Treasury. Since the preferred shares were vested upon issuance in prior years, the cancellation of these shares was considered a contribution back to the company at zero cost with no gain or loss recognized.
(B) Common Stock
During the year ended December 31, 2015, the Company issued 739,894,825 common shares valued at their fair value of $3,181,479 in exchange for conversion of promissory notes, accrued interest, accrued salaries, and commission of $1,344,629 and related derivative liabilities of $1,102,928, thereby recognizing a net loss on conversion of $733,922.
Effective February 16, 2015, the Company amended its Articles of Incorporation (Article 3) to increase the number of shares of common stock, which the Company has the authority to issue from 70,000,000 to 500,000,000.
Effective August 3, 2015, the Company again amended its Articles of Incorporation (Article 3) to increase the number of shares of common stock available to issue from 500,000,000 to 1,000,000,000.
(C) Notes Receivable Common
On May 1, 2014, the Company entered into two Securities Purchase Agreements, one with Adar Bay LLC and the other with LG Capital Inc., each providing for the purchase of a Convertible Redeemable Note. The aggregate principal amount of each note was $100,000. The first note from each of the funders (“Buyers”) being in the amount of $50,000 each and the second (the “Second Note”) shall initially be paid for by the issuance of an offsetting $50,000 secured note issued to the Company by the Buyer (“Buyer Note”), provided that prior to conversion of the Second Note, the Buyer must have paid off the Buyer Note in cash such that the Second Note may not be converted until it has been paid for in cash. The amount due under second note was classified as Contra Equity account and presented under the statement of stockholders’ deficit. On December 19, 2014 and December 24, 2014, respectively, the note holders unilaterally decided not to fund these second notes and hence the Second Note, along with the Buyers Note stands cancelled leaving $0 balance in notes payable and in the Contra Equity Account as at December 31, 2014.
F-29 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Note 11 - Related Party Transactions
Following is the list of related parties and their relationships with the Company for the years ending on December 31, 2015 and 2014:
Name | Relationship | |
Mr. Charles D. Taylor | Director and Chairman of the Board | |
Mr. Peter J. Smith | President, Chief Executive Officer and Director | |
Mr. Enzo Taddei | Chief Financial Officer, Secretary and Director | |
Mr. Patrick V. Dolan | New Business Development Managing Director and Director | |
Alpha 1066, Inc. | Majority owned by two officers of the Company |
On July 1, 2015, the Company entered into a consultancy agreement valued at $148,000 with a Nevada Corporation that is majority owned by the two officers of the Company, Mr. Peter Smith and Mr. Enzo Taddei. During the year ended December 31, 2015, the Company received $148,000 in cash as per the agreement and has provided the relevant consultancy services in due course of the business, thereby recognizing it as revenue from related party in the income statement.
On October 7, 2015, the Company employed and appointed Mr. Charles Taylor as Chairman of the Board of Directors under a renewable employment agreement (initially) for a period of six months. On October 16, 2015, the Company issued 1,000,000 shares of restricted common stock valued at a fair value of $0.0419 per share or $41,900 to Mr. Charles Taylor upon conversion of agreed salary compensation into equity of $40,000.
As discussed in Note 8(b), 8(c) and 8(d), following is the breakdown of related party balances as on December 31, 2015 and 2014:
12/31/2015 | 12/31/2014 | |||||||
Accounts payable and accrued liabilities – related parties | $ | 203,609 | $ | 360,984 | ||||
Short term loans payable – related parties | - | 58,595 | ||||||
Accrued interest – related parties | - | 56,873 | ||||||
Short term convertible notes – related parties (Net of unamortized discount of $268,189) | - | 33,800 | ||||||
$ | 203,609 | $ | 510,252 |
Note 12 - Commitments and contingencies
On October 9, 2013, the Company secured a two month loan for GBP 75,000 (equivalent to $120,420) and issued 10,000 restricted shares of common stock to the lender, The Able Foundation, on December 7, 2013, and also repaid 35,000 GBP (equivalent to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time, the Company compensated the lender with an additional 20,000 restricted shares of common stock in consideration for a for a five month extension on the loan. This stock compensation was issued to the lender also on December 12, 2013. The Company is currently in litigation, in the courts of Dubai, regarding the Able Foundation loan.
The plaintiff, the Able Foundation, is requesting a settlement of $411,272, which is the $226,616 currently owed, and an additional $184,656 accrued in 2015 as a provision for potential damages (see Note 8(e)).
On, June 1, 2015, the Company (the defendant) retained the legal services of a Dubai based law firm called Al Safar & Partners. Currently, there is a judgment against the Company (the defendant) for the recovery of $411,272.
The Company’s Dubai lawyers, Al Safar & Partners, has subsequently appealed this judgement based on the fact that they believe from a legal stand point that:
1) | the Company (the defendant) has not been heard, which is a violation of the fundamental principle of law “Audi Alteram Partem”. | |
2) | there is no legal existence of Global Equity Partners Plc. in Dubai as it is a Republic of Seychelles corporation hence the Courts of Dubai have no jurisdiction in the matter. |
According to the Dubai lawyers, the judgement issued against the Company (the defendant) by the Dubai First Instance Court bears no legality and void therefore the Plaintiff´s claim should be rejected in its entirety.
These legal proceedings and appeal are currently ongoing. The Company intends to vigorously defend the litigation. At this time, the Company cannot predict the outcome of the litigation.
F-30 |
Global Equity International, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
On October 7, 2015, the Company renewed its rent agreement for its head office at Dubai for a further period of two years amounting to a rental of $31,850 per annum for the first year (from November 2015 until October 2016) and $35,035 for the second year (from November 2016 until October 2017). This agreement is further renewable for a period of one year at 5% higher than the current rent.
Note 13 - Subsequent events
On February 29, 2016, the Company paid 363,400 preferred shares of Duo World Inc., which the Company was holding as an investment, to Yenom (Pvt.) Ltd. (“Yenom”). This issuance was for full and final payment of a commission due to Yenom for the introduction, in 2014, of Duo Software Limited a fully owned subsidiary of Duo World Inc.
On March 7, 2016, GE Professionals DMCC, a fully owned subsidiary of Global Equity Partners Plc., which, in turn, is a fully owned subsidiary of Global Equity International Inc., rendered its first invoice for a contract valued at $53,123 for an employment placement in a senior managerial role of a reputable Construction Company based in the Middle East.
On March 14, 2016, the Company received 2,271 common shares in one of its clients based in Switzerland, as per the consultancy agreement, in lieu of contractual services provided.
F-31 |
EXHIBIT INDEX
List of Exhibits attached or incorporated by reference pursuant to Item 601 of Regulation S-B
Exhibit No. | Document Description | |
2* | Plan and Agreement of Reorganization dated November 15, 2010, among Global Equity International, Inc., Global Equity Partners PLC and Stockholders of Global Equity Partners LLC | |
3.1* | Articles of Incorporation | |
3.(i).2** | Certificate of Amendment to Articles of Incorporation, effective February 16, 2015. | |
3.(i).3****** | Certificate of Amendment to Articles of Incorporation, effective August 14, 2015. | |
3.2* | Bylaws | |
4.1*** | Convertible Note, dated November 22, 2013, in the principal amount of $450,000, made by Global Equity International, Inc. and payable to Mr. Jason St. Pierre. | |
4.2* | Certificate of Amendment to Certificate of Designation of Series A Convertible Preferred Stock | |
10.1******* | Employment Agreement dated January 1, 2016, with Peter J. Smith. | |
10.2******* | Employment Agreement dated January 1, 2016, with Enzo Taddei. | |
10.3******* | Employment Agreement dated March 1, 2016, with Patrick V. Dolan. | |
10.4******* | Employment Agreement dated October 7, 2015, with Charles Taylor. | |
10.5* | Consulting Agreement between Global Equity Partners Plc. and RFC K.K. dated October 19, 2011 | |
10.6* | Consulting Agreement between Global Equity Partners Plc. and M1 Luxembourg AG dated December 20, 2010. | |
10.7**** | Consulting Agreement, dated May 25, 2012, between the Company and Regis Card Limited | |
10.8**** | Consulting Agreement, dated December 12, 2012, between the Company and Energy Solutions BV | |
10.9**** | Consulting Agreement, dated November 20, 2012, between the Company and Innoveas AG | |
10.10**** | Consulting Agreement, dated December 5, 2012, between the Company and Scorpion Performance, Inc. | |
10.11***** | Consulting Agreement, dated February 23, 2015, between the Company and Unii Limited. | |
14* | Code of Business Conduct and Ethics adopted on September 2, 2011 | |
21******* | Subsidiaries | |
31.1******* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 | |
31.2******* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 | |
32.1******* | 906 Certification of Principal Executive Officer | |
32.2******* | 906 Certification of Principal Financial Officer | |
* | Incorporated by reference to the Company’s Form 10 Registration Statement filed with the Commission on December 1, 2011, and as subsequently amended. | |
** | Incorporated by reference to the Company’s Form 8-K filed with the Commission on February 17, 2015. | |
*** | Incorporated by reference to the Company’s Form 8-K filed with the Commission on November 29, 2013. | |
**** | Incorporated by reference to the Company’s Form 10-K Annual Report filed with the Commission on April 16, 2013. | |
***** | Incorporated by reference to the Company’s Form 10-K Annual Report filed with the Commission on April 14, 2015. | |
****** | Incorporated by reference to the Company’s Form 8-K filed with the Commission on August 25, 2015. | |
******* | Filed herewith. |
58 |
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.
Global Equity International, Inc. | ||
Dated: March 18, 2016 | By: | /s/ Peter J. Smith |
Peter J. Smith | ||
Its: | President and Chief Executive Officer |
In accordance with the Securities Exchange Act of 1934, this amended report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Dated: March 18, 2016 | By: | /s/ Peter J. Smith |
Peter J. Smith | ||
Its: | President and Chief Executive Officer and | |
Director (Principal Executive Officer) | ||
Dated: March 18, 2016 | By: | /s/ Enzo Taddei |
Enzo Taddei | ||
Its: | Chief Financial Officer, Secretary and | |
Director (Principal Financial Officer and Principal Accounting Officer) |
Dated: March 18, 2016 | By: | /s/ Patrick V. Dolan |
Patrick V. Dolan | ||
Its: | Managing Director |
Dated: March 18, 2016 | By: | /s/ Charles Taylor |
Charles Taylor | ||
Its: | Chairman of the Board of Directors |
59 |