ARGENTUM 47, INC. - Quarter Report: 2016 March (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 March 31, 2016

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 / + (1) 321 200 0142

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 May 10, 2016, there were 780,515,973 outstanding shares of the Registrant’s Common Stock, $.001 par value.

INDEX

Global Equity International, Inc. and Subsidiaries

Consolidated Financial Statements

March 31, 2016

(Unaudited)

CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

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 Statements of Operations

For the three months ended March 31, 2016 and March 31, 2015 (Unaudited)

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

Global Equity International Inc. And Subsidiaries

Consolidated Statements of Cash Flows

For the three months ended March 31, 2016 and March 31, 2015 (Unaudited)

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

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(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 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 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 financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended December 31, 2015. The interim results for the period ended March 31, 2016 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, employment placements and equity participation.

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 $487,744 and net cash provided by operations of $9,540 for the three months ended March 31, 2016; and a working capital deficit of $2,050,775 and stockholders´ equity of $1,036,382 as of March 31, 2016. 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:

Whilst the Company´s current engagements are being consummated and executed, the Company may also have to resort to borrowing additional funds with certain related parties, such as management, and also third party funders on a non-discounted basis (if for shares, on a fixed price basis) 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 and any monies owed to the management can also be forgiven, if necessary.

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

The Company´s deferred revenue, $535,000 at March 31, 2016, 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.

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.

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, depreciation of fixed assets, derivative valuations and equity valuations for non-cash transactions.

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 March 31, 2016 and at December 31, 2015, respectively; the Company had no cash equivalents.

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

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.

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.

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 permanent impairment during the three months ended March 31, 2016 or 2015.

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

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 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

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.

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 milestone basis.

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

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 March 31, 2016 the Company had the following concentrations of accounts receivable with customers:

The Company had no accounts receivable at December 31, 2015.

For the three months ended March 31, 2016 and 2015, the Company had the following concentrations of revenues with customers:

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 three months ended March 31, 2016 and the year ended December 31, 2015:

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.

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

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:

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 March 31, 2016, 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:

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

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 may have 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 March 31, 2016 and December 31, 2015, 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.

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

Changes in Level 3 assets measured at fair value for the three months ended March 31, 2016 were as follows:

Recent Accounting Pronouncements

There are no new accounting pronouncements that have any impact on the Company’s financial statements other than discussed below:

In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-08,”Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which makes targeted improvements to clarify the principal versus agent assessment and are intended to make the guidance more operable and lead to more consistent application. The amendments, however, do not eliminate the significant judgments related to principal versus agent assessments. This guidance is effective for calendar year-end in 2018 for interim and annual reporting periods. The Company is currently evaluating the impact this guidance will have on its Consolidated Balance Sheet.

Note 5 – Investments

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

The Company holds following preferred equity securities in private companies:

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

On February 08, 2016, the Company entered into an agreement with Yenom (Pvt) Limited where the Company agreed to pay an equity commission, for the introduction of a client to the Company, in the form of transfer of 363,400 preferred shares (valued at $0.005 per share) of Duo World Inc. out of the 500,000 preferred shares which were owned by the Company at the year ended December 31, 2015. As a result of this transfer, the Company’s investment in preferred shares of Duo World Inc. was reduced to 136,600 preferred shares as on March 31, 2016 and a gain of $1,454 was recorded on transfer of this preferred stock.

On March 29, 2016, the Company received 1,815 common shares valued at CHF 160 or $163.89 and 456 common shares valued at CHF 261 or $267.34 from a private company and client having a fair market value of $419,365 that is treated as a cost method investment. The value of the cost method investment pertains to receipt of agreed common stock in a private company in which the best evidence of value was based on the management representation of that private company.

At March 31, 2016, 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 March 31, 2016.

Note 6 – Fixed Assets

The following table reflects net book value of fixed assets as at March 31, 2016 and December 31, 2015:

Depreciation expense for the three months ended March 31, 2016 and March 31, 2015, was $2,848 and $2,752, respectively.

Note 7 – Debt & Accounts payables

(A) Accounts payable and accrued liabilities

The following table represents breakdown of accounts payable and accrued liabilities as of March 31, 2016 and December 31, 2015, respectively:

(B) Accounts payable and accrued liabilities – related parties

The following table represents the accounts payable to related parties as of March 31, 2016 and December 31, 2015, respectively:

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(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 March 31, 2016:

(D) Notes payable

Following is the summary of all non-convertible notes, net of debt discount, including the accrued interest as at March 31, 2016:

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

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.

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 next two quarterly installments of $50,000 each, as per the amended agreement, have not been paid as of March 31, 2016 and the total outstanding balance owed to the lender is $480,000 as of March 31, 2016.

(E) Fixed price convertible note payable

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 and the interest will not be accrued on the outstanding principal balance unless an event of default occurs.

During the three months ended March 31, 2016, $1,667 of the debt issuance costs and $10,000 of the debt discount balance was amortized to interest expense, leaving an unamortized issue cost and discount balance of $0.

On March 18, 2016, the Company entered into an exchange agreement with the same lender whereby original purchase agreement dated August 27, 2015 was exchanged with the new agreement to extend the loan repayment term until April 17, 2016. The total exchange price for $135,000 of principal of the Old Note was as follows:

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

Also, in the new note, there was an addition of a conversion option that the lender has right at any time after the exchange date until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.025. There is no beneficial conversion feature as the conversion price is higher than the current market value of the GEQU stock. Since a conversion option was added to the note in the March 18, 2016 modification, this modification is accounted for as a debt extinguishment on that date and $25,200 was recognized as loss on debt extinguishment. (See Note 8)

Subsequent to the three months ended March 31, 2016, on April 28, 2016, St. George decided not to opt for converting the principal loan to common shares. Instead, on April 28, 2016, the Company renegotiated the loan terms, further extending the repayment to July 1, 2016. The terms of this further extension were a one-off 10% interest payment of $13,500 to be added to the principal of $135,000 and the issuance of 3,000,000 common shares. The Company accounted for this further extension as a debt extinguishment of previous extension dated March 18, 2016 and $58,200 was recognized as loss on debt extinguishment comprising of $13,500 of interest payment and $44,700 for issuance of 3,000,000 common shares of the Company valued at a fair value of $0.0149 on the date of new exchange.

Note 8 - Stockholders’ Equity

a) 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:

At March 31, 2016 there were no Series “A” preferred shares issued. 

b) Common Stock

During the three months ended March 31, 2016, the Company issued 1,000,000 common shares valued at a fair value of $0.0252 per share or $25,200 in lieu of exchange fee for a loan note. See Note 7(E).

Note 9 – Related Party Transactions

Following is the list of related parties and their relationships with the Company for the three months ended March 31, 2016 and the year ended December 31, 2015:

As discussed in Note 7(b) and 7(c), following is the breakdown of related party balances as on March 31, 2016 and December 31, 2015:

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

Note 10 – Commitments and contingencies

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 7(D)).

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 judgment based on the fact that they believe from a legal stand point that:

According to the Dubai lawyers, the judgment 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.

Note 11 – Subsequent events

Global Equity International, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

March 31, 2016

(Unaudited)

The Company accounted for this further extension as a debt extinguishment of previous extension dated March 18, 2016 and $58,200 was recognized as loss on debt extinguishment comprising of $13,500 of interest payment and $44,700 for issuance of 3,000,000 common shares of the Company valued at a fair value of $0.0149 per share on the date of new exchange.

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 March 31, 2016 and March 31, 2015:

The Company had revenues amounting to $843,528 and $15,000, for the three months ended on March 31, 2016 and 2015, respectively.

Following is the breakdown of total revenue for the three months ended March 31, 2016 amounted to $843,528:

For the three months ended March 31, 2016 and 2015, the Company had the following concentrations of revenues with customers:

The total operating expenditures amounted to $319,060 and $472,592, for the three months ending on March 31, 2016 and 2015, respectively. The following table sets forth the Company’s operating expenditure analysis for both periods:

During the three months ended March 31, 2016, total operating expenses were decreased by $153,532 from the previous three months ending on March 31, 2015. The reason for this decrease is mainly due to the reduction in general & administrative expenses, salaries and professional fees.

The net income (loss) from operations for the three months ended March 31, 2016 and 2015, were $524,468 and $(457,592), respectively.

The Company´s other income and (expenses) for the three months ended March 31, 2016 and 2015, were $(36,724) and $(338,228), respectively. The following table sets forth the Company’s other income and (expenses) analysis for both periods:

Our total other expenses were reduced substantially due to the fact that the Company settled its convertible debts last year. The settlement of this debt last year resulted in large amounts of interest expense, loss on derivative liabilities and amortization of debt discount during the three months ended March 31, 2015. Loss on extinguishment of debt at March 31, 2016 includes $25,200 arising due to issuance of shares as exchange fee for a loan note to a lender.

The net income (loss) for the three months ended March 31, 2016 and 2015 were $487,744 and $(795,820), respectively.

The Company had 777,165,973 and 79,322,025 common shares issued and outstanding at March 31, 2016 and March 31, 2015, respectively. The weighted average number of shares for the three months ended March 31, 2016 and March 31, 2015, was 776,176,962 and 48,357,432, respectively. Net income / (loss) per share for both periods was $0.00 and $(0.02), respectively.

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 $524,468, a total Other Income (Expenses) amounting to $(36,724) and net income of $487,744 for the three months ended March 31, 2016.

The Company had $56,276 in cash; net cash provided by operations of $9,541 for the three months ended March 31, 2016; and a working capital deficit of $2,050,775 and stockholders´ equity of $1,036,382 as of March 31, 2016. Some of 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 primarily dependent on:

While the Company´s current engagements are being consummated and executed, the Company may also resort to borrowing additional funds with certain related parties, such as management, and also third party funders on a non-discounted basis (on a fixed price conversion basis) to sustain the Company’s existence. In addition, in the event that operating cash flows are slowed, the Company would reduce its overhead wherever possible and any monies owed to the management can also be forgiven, if necessary.

The Company´s deferred revenue, $535,000 at March 31, 2016, 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.

It is important to note that the two largest debts stated on our current liabilities are non-collateralized and non-convertible loans.

The Company believes that it will be able to invoice and receive at least one large cash based success fee on or before June 30, 2016, which will allow sufficient cash flow to pay off all of our debt and also allow the company sufficient cash flow to continue to grow and expand in the next twelve months without having to resort to third party or affiliate loans.

The Company also believes that it will close and be able to invoice one or two other cash based success fees within the next six months.

Also, it is important to note, that the common shares that the Company receives in lieu of equity fees are always issued with registration rights; hence; these shares will be deemed a “Shares for sale” once the Company´s client commences to trade on a Stock Exchange.

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.

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:

MILESTONES FOR NEXT TWELVE MONTH 2016-2017:

Our specific plan of operations and milestones through May 2017 are as follows:

To date, we have 19 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,growth and expansion:

We currently are relying on introductions to potential clients by the following firms in the Middle East, South East Asia, Europe and the US:

We intend to develop relationships with a further six “introducers” to potential new business for the Company within the next 12 months.

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.

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.

We will continue to establish a firm presence in South East Asia where we are attracting clients, relationships and awareness.

We intend to form relationships with merger and acquisition specialists during the next 12 months, which will hopefully enable us to:

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.

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.

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.

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.

We will continue working on different “Road shows” in Dubai, Eastern Europe, Western Europe, South East Asia and the USA.

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 3. Quantitative and Qualitative Disclosure about Market Risk.

Not applicable.

Item 4. 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.

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.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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:

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 1A. Risk Factors.

Not applicable.

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

On March 18, 2016, the Company issued 1,000,000 shares common shares valued at a fair value of $0.0252 per share or $25,200 to St. George Investments LLC, in lieu of exchange fee for a loan note.

On April 25, 2016, the Company issued 250,000 shares of restricted common stock valued at a fair value of $0.0143 per share or $3,575 in lieu of client introduction fee of $3,750.

On April 25, 2016, the Company issued 100,000 shares of restricted common stock valued at a fair value of $0.0143 per share or $1,430 in lieu of client introduction fee of $1,500.

On April 29, 2016, the Company issued 3,000,000 shares common shares valued at a fair value of $0.0149 per share or $44,700 to St. George Investments LLC, in lieu of a second exchange fee for a loan note.

The above securities were issued by the Company in reliance on the exemption from registration provided by Section 4.(a) (2) of the Securities Act of 1933, as amended.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

See Exhibit Index below for exhibits required by Item 601 of regulation S-K.

EXHIBIT INDEX

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.