ARGENTUM 47, INC. - Quarter Report: 2015 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

or

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION FROM __________ TO __________.

Commission File Number: 0-54557

GLOBAL EQUITY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number: +971 (0) 42767576

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its 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 and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [  ] No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 4, 2015, there were 772,523,183 outstanding shares of the Registrant’s Common Stock, $.001 par value.

INDEX

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Global Equity International, Inc. and Subsidiary

Consolidated Financial Statements

September 30, 2015

(Unaudited)

CONTENTS

Global Equity International, Inc. and Subsidiaries

Consolidated Balance Sheets

The accompanying notes are an integral part of these consolidated financial statements.

Global Equity International, Inc. and Subsidiaries

Consolidated Statement of Operations

For the three and nine months ended September 30, 2015 and September 30, 2014 (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

Global Equity International Inc. And Subsidiaries

Consolidated Statement of Cash Flows

For the nine months period ended September 30, 2015 and September 30, 2014 (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

Note 1 - Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and disclosures necessary for a comprehensive presentation of consolidated financial position, results of operations, or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair consolidated financial statements presentation.

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited consolidated financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended December 31, 2014. The interim results for the period ended September 30, 2015 are not necessarily indicative of results for the full fiscal year.

Note 2 - 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% subsidiary GE Professionals DMCC (Dubai).

Revenue is generated from business consulting services, introduction fees, and equity participation.

Note 3 - Going Concern

As reflected in the accompanying consolidated financial statements, the Company had a net loss of $190,289 and net cash used in operations of $120,366 for the nine months ended September 30, 2015; and a working capital deficit of $1,615,578 and stockholders’ deficit of $48,712 as of September 30, 2015. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue its operations is dependent on Management’s plans, which include the raising of capital through non-convertible debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.

The Company expects to expend funds to implement a marketing program to increase awareness of its business model, which includes, but is not limited to, acquisition of private companies, with the intention of taking those companies public on recognized stock exchanges around the globe and possibly dual listing some of its clients on foreign stock exchanges. In the event that operating cash flows are slowed or nonexistent, the Company plans to reduce its overhead wherever possible.

Depending upon market conditions, the Company may not be successful in raising sufficient additional capital to achieve its business objectives. In such event, the business, prospects, financial condition, and results of operations could be materially adversely affected; hence there is substantial doubt about the Company’s ability to continue as a going concern.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

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.

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 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, derivative valuations and 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 September 30, 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.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

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 at each historical transaction date spot rate. 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, therefore a statement of comprehensive income (loss) is not presented. Gains and losses resulting from foreign currency transactions are included in the statement of operations.

For the three and nine months ended September 30, 2015 and for the year ended December 31, 2014, our functional and operational currency was the U.S. Dollar.

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.

At June 30, 2013, the Company had investments in securities of two different companies, having a cost of $163,000 that was treated as a cost method investment. The value of the cost method investment pertains to the receipt of 9.2% of the common stock in a private company in which the best evidence of value was the services rendered and a further 9.86% of the common stock in another private company in which the best evidence of value was the services rendered.

At June 30, 2013, 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 $160,000 of the investments.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

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 is 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.

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 the 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 this private company in which the best evidence of value was the services rendered.

(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 permanent impairment during the nine months ended September 30, 2015 and 2014.

Fixed Assets

Fixed assets are to be 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.

Depreciation expense for the nine months ended September 30, 2015 and September 30, 2014, was $8,416and $1,630, respectively.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

Beneficial Conversion Feature

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

For certain debt issued whether convertible or not, the Company provides the debt holder 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 free-standing 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. At September 30, 2015, the Company had no derivative liability balance.

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.

We recognize cash consideration as revenues as the services are performed either on a pro rata basis or on a stage of completion basis.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

Securities received as consideration are typically 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.

All revenues are generated from clients whose operations are based outside of the United States.

At September 30, 2015 and December 31, 2014, the Company had the following concentrations of accounts receivables with customers:

For the nine months ended September 30, 2015 and 2014, the Company had the following concentrations of revenues with customers:

During the nine months ended September 30, 2015, the Company received $1,540,950 in equity securities in two private companies in exchange for services performed. The valuation of one company was based on 3,460,000 common shares valued at $0.25 per share, based on a contemporaneous private placement of the customer’s shares and 500,000 preferred shares of the same company valued at $0.001 per share. The valuation of other company was based on 4,500,000 common shares valued at $0.15 per share, based on net asset value of the company and 450,000 preferred shares of the same company valued at $0.001 per share.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

The Company currently holds the following common equity securities in private and also reporting companies:

The Company currently holds the following preferred equity securities:

Deferred Revenue

Deferred revenue represents fees that have been received by the Company for requested services that have not been completed. During the nine months ending on September 30, 2015, the Company further recognized $783,000 as deferred revenue, making total deferred revenue balance of $1,245,015.As at September 30, 2015, the Company recognized $745,015 of deferred revenue as revenue, leaving the deferred revenue balance of $500,000 (which includes $250,000 of deferred revenue received during the years ended 2013 and 2014.)

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:

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

Earnings per Share

Basic 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 is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

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:

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 has assets and liabilities measured at fair market value on a recurring basis. Consequently, the Company had gains and losses reported in the statement of operations.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

The following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis at September 30, 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):

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:

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 nine months ended September 30, 2015 and the year ended December 31, 2014, were as follows:

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.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

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 nine months ended September 30, 2015.

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. This loan is currently in default. The Company has spoken to Dreamscapes Properties International Inc. about a payment plan over the next 3 months and has received a positive response.

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 nine months ended September 30, 2015, the company wrote off $4,825 as it was deemed uncollectible.

Recent Accounting Pronouncements

There are no new accounting pronouncements that have any impact on the Company’s 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.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

Note 5 – Debt & Accounts Payables

(A) Accounts payable and accrued liabilities

The following table represents breakdown of accounts payable as of September 30, 2015 and December 31, 2014, respectively:

On September 9, 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 $0.01 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. The $22,000 loss has been recorded on the income statement as a loss on conversion of notes.

On September 10, 2015, another employee of the Company decided to convert his accrued salary and bonus 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. The $57,512 loss has been recorded on the income statement as a loss on conversion of notes.

(B) Accounts payable and accrued liabilities – related parties

The following table represents the accounts payable to related parties as of September 30, 2015 and December 31, 2014, respectively:

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. As a result 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, 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, and 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. The total aggregate loss amounted to $614,039 and is stated on the income statement under loss on conversion of notes.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

(C) Related party – short term loans payable

The Company received loans from two of its officers and directors. The loans are non-interest bearing, unsecured and due on demand. The following table represents the loans payable activity as of September 30, 2015:

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 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. As a result 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 and 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. The total aggregate loss amounted to $156,560 and is stated on the income statement under loss on conversion of notes.

(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.

During the nine months ended September 30, 2015, the Company converted the full amount of convertible loans outstanding to its officers and directors into its common stock which makes the outstanding convertible loan payable of $0 as at September 30, 2015.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

During the nine months ended September 30, 2015, total interest of $17,297 was accrued and a total of $268,190 debt discount was amortized leaving an unamortized balance of $0. The fair value of derivative liability as on September 30, 2015 is $0, as the debt was fully converted into shares, thereby recognizing a net loss on derivative liability for the nine months ending on September 30, 2015 of $206,765.

(E) Notes payable

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

A summary of all non-convertible notes, net of debt discount, including the accrued interest as depicted in Note 5 e) at September 30, 2015.

(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).

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.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

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 September 30, 2015, was nil as this loan was fully converted into shares during the nine months ending on September 30, 2015.

During the nine months ended September 30, 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 nine months ending on September 30, 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 nine months ending on September 30, 2015, of $61,641.As of September 30, 2015, this convertible debt has been fully extinguished.

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 $50,000secured 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 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.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

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 September 30, 2015, was nil as this loan was fully converted into shares at the quarter ending on March 31, 2015.

During the nine months ended September 30, 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 nine months ending on September 30, 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 nine months ending on September 30, 2015 of $(157). As of September 30, 2015, this convertible debt has been fully extinguished.

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.

The fair value of the derivative liability as at September 30, 2015, was nil as this loan was fully converted into shares during the nine months ending on September 30, 2015.

During the nine months ended September 30, 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 nine months ended September 30, 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 nine months ending on September 30, 2015 of $190,844.As of September 30, 2015, this convertible debt has been fully extinguished.

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.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

During the nine months ended September 30, 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 on September 30, 2015, was $0 as this loan was fully paid back during the quarter ending on March 31, 2015 and the company recognized a gain of $51,613 on extinguishment of derivative liability balance.

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 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 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.

During the nine months ending on September 30, 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 September 30, 2015.

During the nine months ending on September 30, 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 September 30, 2015, is recorded at $0 as the debt was fully converted into shares, thereby recognizing a net gain on derivative liability during the nine months ending on September 30, 2015, of $128,481.

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.

During the nine months ending on September 30, 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 September 30, 2015.

During the nine months ending on September 30, 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 September 30, 2015 is recorded at $0 as the debt was fully converted into shares, thereby recognizing a net loss on derivative liability during the nine months ending on September 30, 2015 of $78,284.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

Note 6 - Equity and 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:

Under Regulation S-X, Rule 5-02-28, preferred stock must be classified outside of stockholders’ equity when the stock is:

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 nine months ended September 30, 2015, the Company issued 735,252,035 common shares valued at their fair value of $3,047,052 in exchange for conversion of promissory notes, accrued interest, accrued salaries and commission of $1,212,102 and related derivative liabilities of $1,102,928, thereby recognizing a net loss on conversion of $732,022.

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.

Global Equity International, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

September 30, 2015

(Unaudited)

(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 is 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.

Note 7 – Related Party Transactions.

On July 1, 2015, the Company entered into a consultancy agreement valued at $148,000 with a Nevada Corporation that is majority owned by Mr Peter Smith and Mr. Enzo Taddei. At September 30, 2015 we had received a total of $98,000 and this income was recognized as revenue.

Note 8 – 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. On December 7, 2013, the company agreed to pay an extra 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, Able Foundation, is requesting a settlement of $300,000 which is the $226,616 currently owed plus an additional $73,384 of damages (see Note 5(e)). On, June 1, 2015, the Company (the defendant) retained the legal services of a Dubai based law firm called Alsafar & Partners. These legal proceeding are currently ongoing. The Company intends to vigorously defend the litigation. At this time, the Company cannot predict the outcome of the litigation.

On October 28, 2013, the Company entered into a lease agreement for its head office at Dubai for a period of two years amounting to a rental of $31,850 per annum. On October 7, 2015, the Company renewed its lease 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 renewable for a further period of one year at 5% higher than the current rent.

Note 9 – Subsequent events

On October 7, 2015, the Company renewed its lease 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 and $35,035 for the second year. This agreement will expire on October 30, 2017 and will be renewable for a further period of one year at 5% higher than the current rent.

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 based on the quoted trade price on the day of issuance or $41,900 to Mr. Charles Taylor upon conversion of agreed salary compensation of $40,000 into equity.

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

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 the unaudited financial statements, and the 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:

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.

For the three months ended September 30, 2015 and September 30, 2014:

The Company had revenues amounting to $1,130,465 and $184,000, for the three months ended September 30, 2015 and 2014, respectively.

Following is the breakdown of total revenue for the three months ended September 30, 2015 amounted to $1,130,465:

For the three months ended September 30, 2015 and 2014, the Company had the following concentrations of revenues with customers: