ARGENTUM 47, INC. - Quarter Report: 2017 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, 2017

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 12, 2017, there were 395,879,011 outstanding shares of the Registrant’s Common Stock, $0.001 par value.

INDEX

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Global Equity International, Inc. and Subsidiaries

Consolidated Financial Statements

March 31, 2017

(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 Statements of Operations

For the three months ended March 31, 2017 and March 31, 2016 (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, 2017 and March 31, 2016 (Unaudited)

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

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

Note 1 - Organization and Nature of Operations

Global Equity Partners, Plc. (“GEP”), a private company, was organized under the laws of the Republic of Seychelles on September 2, 2009. Global Equity International Inc. (the “Company” or “GEI”), a reporting company since June 21, 2012, was organized under the laws of the state of Nevada on October 1, 2010. On November 15, 2010, GEP executed a reverse recapitalization with GEI. On August 22, 2014, we formed a Dubai subsidiary of GEP called GE Professionals DMCC. On June 10, 2016, GEI incorporated its wholly owned subsidiary, called GEP Equity Holdings Limited (“GEP EH”), under the laws of the Republic of Seychelles. On March 14, 2017, the Company´s board of directors unanimously voted to transfer the ownership of GE Professionals DMCC (Dubai) to GEP EH.

Revenue is generated from business consulting services and employment placements.

Note 2 - 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, 2016. The interim results for the period ended March 31, 2017 are not necessarily indicative of results for the full fiscal year.

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 loss of $369,017 and net cash used in operations of $111,750 for the three months ended March 31, 2017; and a working capital deficit of $1,819,676 as of March 31, 2017. It is management’s opinion that these factors may raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issue date of this report.

The ability for the Company to continue its operations is primarily dependent on:

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

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 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 be forgiven, if necessary.

The Company´s deferred revenue, $200,000 at March 31, 2017, is non-refundable hence once certain contractual milestones are achieved or contractual terms pass over time, as applicable, on each individual engagement a proportion of deferred revenue will become revenue for the Company and therefore no cash outlays are required for these liabilities.

The two largest debts (The Able Foundation loan & Eden loan) stated on our current liabilities are non-collateralized and non-convertible loans. However, Able Foundation has a judgment against the Company, which is currently under appeal (See Note 10).

Note 4 - Summary of Significant Accounting Policies

Principles of Consolidation

Global Equity International Inc. is the parent company of its two 100% owned subsidiaries called Global Equity Partners Plc. and GEP Equity Holdings Limited. GEP Equity Holdings Limited is the parent company of its 100% owned subsidiary, GE Professionals DMCC (Dubai). All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-confirming events. Accordingly, the actual results could differ from those estimates. Significant estimates in the accompanying financial statements include allowance for doubtful accounts and loans, estimates of fair value of securities received for services, estimates of fair value of securities held, depreciation of fixed assets, valuation allowance on deferred tax assets, derivative valuations, and equity valuations for non-cash equity grants.

Risks and Uncertainties

The Company’s operations are subject to significant risk and uncertainties including financial, operational, competition and potential risk of business failure. The risk of social and governmental factors is also a concern since the Company is headquartered in Dubai.

Cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At March 31, 2017 and at December 31, 2016 the Company had no cash equivalents.

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(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. There was no allowance for bad debt at March 31, 2017 and December 31, 2016.

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 pegged 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 statement. 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, 2017 or March 31, 2016.

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(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 over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

Debt Issue Costs

The Company may pay debt issue costs in connection with raising funds through the issuance of debt whether convertible or not or with other consideration. These costs are recorded as debt discounts and are amortized over the life of the debt to the statement of operations as amortization of debt discount.

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 over the life of the debt to the statement of operations as amortization of debt discount. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

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. Upon conversion of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives and debt discounts and recognizes a net gain or loss on debt extinguishment.

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

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.

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 completed.

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

At March 31, 2017 and December 31, 2016, the Company had the following concentrations of accounts receivable with customers:

For the three months ended March 31, 2017 and 2016, the Company had the following concentrations of revenues with customers:

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

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, 2017 and the year ended December 31, 2016:

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 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.

Share based payments, excluding restricted stock, are valued using a Black-Scholes pricing model.

When computing fair value, the Company considered the following variables:

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

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, 2017 and December 31, 2016, the Company had common stock equivalents of 12,897,059 and 2,941,176 common shares respectively, in the form of fixed price convertible notes, which, if converted, would be dilutive. See Note 7(E). These common stock equivalents were not included in the computation of diluted net loss per share because the effects would have been anti-dilutive due to the net losses.

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 based on the short-term nature of these instruments.

The Company measures its derivative liabilities at fair market value on a recurring basis and measures its non-marketable securities at fair value on a non-recurring basis. Consequently, the Company had gains and losses reported in the statement of operations.

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

The following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis at March 31, 2017 and December 31, 2016, 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 publicly 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 three months ended March 31, 2017 were as follows:

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

Recent Accounting Pronouncements

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

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update is intended to improve the financial reporting requirements for revenue from contracts with customers by providing a principle-based approach. The core principle of the standard is that revenue should be recognized when the transfer of promised goods or services is made in an amount that the entity expects to be entitled to in exchange for the transfer of goods and services. The update also requires disclosures enabling users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On July 9, 2015, the FASB voted to defer the effective date of this guidance by one year. On March 17, 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations, which clarifies how an entity determines if it is a principal or an agent for each specified good or service promised to the customer, the nature of each specified good or service, and how an entity that is principal obtains control of a good and service provided by another party involved in providing goods or services to a customer. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing, which clarifies the guidance related to whether goods or services are distinct within the context of contract and therefore a performance obligation and the timing and pattern of revenue recognition for IP licenses. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and added some practical expedients. In December 2016, the FASB issued ASU 2016-20, Revenue from Contracts with Customers (Topic 606): Technical Corrections and Improvements, which provides clarifying guidance in certain technical areas. The standard and related amendments will be effective for financial statements issued by public companies for interim and annual reporting periods beginning after December 16, 2018. Early adoption of the standard is permitted, but not before the original date of financial statements issued by public companies for interim and annual reporting periods beginning after December 16, 2017. We currently do not plan to early adopt this guidance and are evaluating the potential impact of this guidance on our consolidated financial statements as well as transition methods.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flow (Topic 230). This update is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The update provides new guidance regarding the classification of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitized transactions, and separately identifiable cash flows and application of the predominance principle. This standard will be effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2017. Early adoption of the standard is permitted. The standard will be applied in a retrospective approach for each period presented. We have completed an initial evaluation of this standard, which requires cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities. We have determined that there were no cash payments involved in debt extinguishment during the three months ended March 31, 2017, hence there will be no potential impact on our financial statements due to this update. We will continue to evaluate the potential impact of this guidance on our consolidated financial statements.

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. The amendments of this ASU are effective for reporting periods beginning after December 15, 2018, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Management currently does not plan to early adopt this guidance and is evaluating the potential impact of this guidance on the consolidated financial statements as well as transition methods.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall (Topic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 amends the guidance on the classification and measurement of financial instruments. Some of the amendments in ASU 2016-01 include the following: 1) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; 2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and 4) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value; among others. For public business entities, the amendments of ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the effects of ASU 2016-01 on its consolidated financial statements and disclosures.

Note 5 – Investments

The Company, through its subsidiaries Global Equity Partners Plc. (GEP) and GEP Equity Holdings Limited (GEP EH), holds the following common equity securities in private and reporting companies as at March 31, 2017 and December 31, 2016:

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

The Company, through its subsidiary GEP Equity Holdings Limited (GEP EH), holds the following preferred equity securities in private and reporting companies as at March 31, 2017 and December 31, 2016:

At March 31, 2017, 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 of March 31, 2017.

Note 6 – Fixed Assets

Following table reflects net book value of fixed assets as of March 31, 2017 and December 31, 2016:

Depreciation expense for the three months ended March 31, 2017 and March 31, 2016, was $2,787 and $2,848, respectively.

Note 7 – Debt & Accounts Payables

(A)  Accounts Payables and other accrued liabilities

The following table represents breakdown of accounts payable as of March 31, 2017 and December 31, 2016, respectively:

(B)  Accrued Contingencies and Penalties

Following is a breakdown of accrued liabilities as at March 31, 2017 and December 31, 2016, respectively:

(C)  Accounts Payable and Accrued Liabilities – Related Parties

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

The following table represents the accounts payable and accrued expenses to related parties as of March 31, 2017 and December 31, 2016, respectively:

(D) Notes Payable

Following is the summary of all non-convertible notes, net of debt discount, including the accrued interest and accrued liabilities as at March 31, 2017:

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(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 remaining installments totaling to $480,000, as per the amended agreement, have not been paid as of March 31, 2017.

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

(E) Fixed Price Convertible Notes Payable

Following is the summary of all fixed price convertible notes, net of debt discount, including the accrued interest as at March 31, 2017:

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

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 income statement, 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:

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 was no beneficial conversion feature as the conversion price was higher than the current market value of the Company´s stock at that time. Since a conversion option was added to the note in the March 18, 2016 modification, this modification was accounted for as a debt extinguishment on that date and $25,200 was recognized as loss on debt extinguishment.

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-time 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.

On July 1, 2016, after receipt of $148,500 from Mammoth Corporation (New Lender), St. George (Previous Lender) assigned and transferred to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by the Company to St. George Investments LLC in the amount of $148,500 dated April 28, 2016. The Company re-negotiated the loan terms with new lender (Mammoth Corporation) after the above assignment and issued a restated 9-month convertible promissory note amounting to $163,350 dated July 1, 2016. The terms of this exchanged note were a one-time 10% increase in the principal loan of $14,850, increasing the principal sum from $148,500 to $163,350. The new lender also has a right, at any time after the issue date of revised note 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 $0.017. The fair value of stock as on the date of exchange was $0.0197. This indicated a beneficial conversion feature (BCF) of the Note as the conversion price is lower than the fair value of the Company´s stock as on July 1, 2016. The Company accounted for the difference arising due to BCF amounting to $25,944 as a debt discount with a corresponding effect to additional paid in capital. Interest on unpaid principal balance shall not accrue during the term of the note unless an event of default occurs. The Company accounted for this exchange as a debt extinguishment of previous note dated April 28, 2016 and $14,850 was further recognized as loss on debt extinguishment.

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

On September 16, 2016, the note holder partially converted $59,500 of the note to the common shares of the Company at an agreed fixed price of $0.017 per share. As a result of this conversion, the Company issued 3,500,000 common shares to Mammoth Corporation.

On December 1, 2016, the note holder partially converted $53,850 of the note to the common shares of the Company at an agreed fixed price of $0.017 per share. As a result of this conversion, the Company issued 3,167,647 common shares to Mammoth Corporation.

On February 2, 2017, the Company issued 5,000,000 common shares to Mammoth Corporation in order to settle remaining payable balance in full amounting to $50,000. The Company verbally agreed to a conversion price of $0.01 per share other than the contractual fixed price of $0.017 per share, in order to fully settle this obligation; thereby $39,324 was recognized as a loss on conversion of this note and remaining debt discount balance arising due to BCF amounting to $2,647 was fully amortized on the date of final conversion.

During the three months ended March 31, 2017, the company amortized $7,599 of debt discount balance arising due to BCF, leaving un-amortized debt discount balance of $31,401 as of March 31, 2017. The outstanding convertible note balance amounted to $60,000 as of March 31, 2017.

On February 23, 2017, St. George (Previous Lender) assigned and transferred to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by the Company to St. George Investments LLC in the amount of $167,500 dated August 25, 2016. The Company re-negotiated the loan terms with new lender (Mammoth Corporation) after the above assignment and issued a restated 9 months fixed price convertible promissory note amounting to $184,250 dated February 23, 2017. The terms of this exchanged note were a one-time 10% increase in the principal loan of $16,750, increasing the principal sum from $167,500 to $184,250. The new lender also has a right, at any time after the issue date of revised note 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 $0.017. Fair value of the Company stock as on the date of exchange was $0.0179. This indicated a beneficial conversion feature (BCF) of the Note as the conversion price is lower than the fair value of the Company stock as on February 23, 2017. The Company accounted for the difference arising due to BCF amounting to $9,754 as a debt discount with a corresponding effect to additional paid in capital. Interest on unpaid principal balance shall not accrue during the term of the note unless an event of default occurs. The Company accounted for this exchange as a debt extinguishment of previous note dated August 25, 2016 and $16,750 was recognized as loss on debt extinguishment.

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

On March 28, 2017, the note holder partially converted $50,000 of the note to the common shares of the Company at a conversion price of $0.0080925 per share, this particular conversion price was less than the agreed fixed price of $0.017, due to the note entering into temporary default. As per the agreement, an event of default occurs when the closing bid price of the Company stock falls below the agreed level of $0.0135. This default clause can be remedied by trading over $0.0135 for 4 consecutive trading days. As a result of this conversion, the Company issued 6,178,560 common shares to Mammoth Corporation and $40,305 was recognized as a loss on conversion of this note.

During the three months ended March 31, 2017, the company amortized $3,577 of debt discount balance arising due to BCF, leaving un-amortized debt discount balance of $6,177 as of March 31, 2017. The outstanding convertible note balance amounted to $134,250 as of March 31, 2017.

Subsequent to the three months ended March 31, 2017; on April 13, 2017, the note holder partially converted $67,125 of the note to the common shares of the Company at a conversion price of $0.006565 per share, this particular conversion price was less than the agreed fixed price of $0.017, due to the note entering into temporary default. As per the agreement, an event of default occurs when the closing bid price of the Company stock falls below the agreed level of $0.0135. This default clause can be remedied by trading over $0.0135 for 4 consecutive trading days. As a result of this conversion, the Company issued 10,224,676 common shares to Mammoth Corporation and $66,527 was recognized as a loss on conversion of this note.

Note 8 - Stockholders’ Equity

(A) Preferred Stock

On November 30, 2011, the Company designated 5,000,000 of its authorized preferred stock as 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:

On May 19, 2015, the board of directors agreed to the non-redemption of the redeemable Series “A” Preferred Shares and the officers of the company that held these Preferred Shares, returned all 1,983,332 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.

On July 15, 2015 the designation of the 5,000,000 Series “A” preferred shares was withdrawn.

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

On November 10, 2016, the Company designated 45,000,000 of its authorized preferred stock as Series “B” convertible preferred shares. The Certificate of Designation stated the following:

On November 11, 2016, all Directors of the Company, offered to retire and exchange an aggregate 450,000,000 shares of Common Stock owned by them for 45,000,000 Series “B” Preferred Stock. The Company permitted Messrs. Taddei, Dolan and Smith to exchange 200,000,000, 50,000,000 and 200,000,000 shares of Common Stock, respectively, for 20,000,000, 5,000,000 and 20,000,000 shares of Series “B” Preferred Stock, respectively. There was no loss or gain related to this transaction as the value of the common shares exchanged equated to the value of the Series “B” Preferred shares received.

(B) Common Stock

During the three months ended March 31, 2017, the Company issued 11,178,560 common shares because of partial conversions of two convertible notes in following manner:

Note 9 – Related Party Transactions

At March 31, 2017, there were accounts payable and accrued liabilities due to related parties. (See Note 7(C)).

Note 10 – Commitments and contingencies

Contingencies

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

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.

During 2015 and 2016, the Company’s Dubai lawyers, Al Safar & Partners, have appealed this judgment various times based on the fact that they believed from a legal stand point that:

All prior appeals were rejected by the Dubai Courts, however a new appeal against the formal execution of this judgement was filed in September 2016 and is still pending as of the date of the filing of this report.

Aside from the foregoing matter, we are not subject to any other pending or threatened litigation.

Commitments

Note 11 – Subsequent events

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.

Our MD&A is comprised of the following sections:

A. Critical accounting estimates and policies

B. Business Overview

C. Results of operations for the three months ended March 31, 2017 and March 31, 2016

D. Financial condition as at March 31, 2017 and December 31, 2016

E. Liquidity and capital reserves

F. Business development

A. Critical accounting estimates and policies:

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), which requires management to make estimates and assumptions that affect reported and disclosed amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period.

We believe that the critical accounting policies set forth in the accompanying consolidated financial statements describe the more significant judgments and estimates used in the preparation of our consolidated financial statements. These critical accounting policies pertain to revenues recognition, valuation of investments, convertible notes and derivatives and; stock based compensation.

If actual events differ significantly from the underlying judgments or estimates used by management in the application of these accounting policies, there could be a material effect on our results of operations and financial condition.

B. Business overview:

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 GEP called GE Professionals DMCC. On June 10, 2016, GEI incorporated its wholly owned subsidiary, called GEP Equity Holdings Limited (“GEP EH”), under the laws of the Republic of Seychelles. On March 14, 2017, the Company´s board of directors unanimously voted to transfer the ownership of GE Professionals DMCC (Dubai) to GEP EH.

GEP Equity Holdings Limited and its Dubai based subsidiary, GE Professionals DMCC, provide consulting services, such as corporate restructuring, management recruitment and development for corporate marketing, investor and public relations, regulatory compliance and introductions to financiers, to companies desiring to be listed on stock exchanges in various parts of the world.

Our authorized capital consists of 950,000,000 shares of common stock having a par value of $0.001 per share and 50,000,000 shares of preferred stock having a par value of $0.001.

C. Results of operations for the three months ended March 31, 2017 and March 31, 2016:

The Company had revenues amounting to $106,713 and $843,528, for the three months ended March 31, 2017 and 2016, respectively.

The total revenue reduced by $736,815 due the fact that we received $419,365 in equity securities in a private company in exchange for services performed during the comparative three months ended March 31, 2016. Also, during comparative three months ended March 31, 2016, $276,630 was recognized as revenue from deferred revenue against equity securities received in prior quarters. During the three months ended March 31, 2017, we didn’t receive any such equity securities which resulted in a decrease in revenues when compared to three months ended March 31, 2016. Following is the breakdown of total revenue for the three months ended March 31, 2017, which amounted to $106,713:

For the three months ended March 31, 2017 and 2016, the Company had the following concentrations of revenues with customers:

The total operating expenditures amounted to $310,781 and $319,060, for the three months ending on March 31, 2017 and 2016, respectively. The following table sets forth the Company’s operating expenditure analysis for both periods: 

During the three months ended March 31, 2017, total operating expenses were reduced by $8,279 from the previous three months ending on March 31, 2016. The reason for this decrease is mainly due to the decrease in professional services received by the Company during the current three months ending on March 31, 2017.

The (loss) / income from operations for the three months ended March 31, 2017 and 2016, were $(204,068) and $524,468, respectively.

The Company´s total other expenses for the three months ended March 31, 2017 and 2016, were $(164,949) and $(36,724), respectively. The following table sets forth the Company’s other expenses analysis for both periods:

Our total other expenses were increased due to the fact that the Company amortized more debt discount on its debt as compared to prior three months ended March 31, 2016. Also, there were a couple of partial conversions of fixed price convertible debt at a price less than the contractual price, that resulted in loss on conversion of notes into common stock of $79,629 during the three months ended March 31, 2017. There was no such loss booked during the three months ended March 31, 2016.

The net (loss)/income for the three months ended March 31, 2017 and 2016 were $(369,017) and $487,744, respectively.

The Company had 385,654,335 and 777,165,973 common shares issued and outstanding at March 31, 2017 and March 31, 2016, respectively. This reduction in common shares occurred because on November 11, 2016, all Directors and Officers of the Company offered to retire and exchange an aggregate 450,000,000 shares of Common Stock owned by them for 45,000,000 Series “B” Preferred Stock of the Company. The weighted average number of shares for the three months ended March 31, 2017 and March 31, 2016, was 377,848,394 and 776,176,962, respectively. Net (loss) / income per share for both periods was $(0.00) and $0.00, respectively.

D. Financial condition as at March 31, 2017 and December 31, 2016:

Assets:

The Company reported total assets of $3,216,523 and $3,228,442 as of March 31, 2017 and December 31, 2016, respectively. These mainly include our investment in securities of our clients that we received as part of our consulting fees. We had long term investments amounting to $3,085,322 as at March 31, 2017 and December 31, 2016. Our fixed assets include office equipment having a net book value of $7,428 and $10,215 as at March 31, 2017 and December 31, 2016, respectively. Furthermore, our current assets at December 31, 2016 totaled $132,905 and at March 31, 2017, these current assets amounted to $123,773 comprised of cash of $14,773, accounts receivable of $85,173 and prepaid and other current assets of $23,827.

Liabilities:

Our current liabilities at December 31, 2016 totaled $1,814,735. At March 31, 2017, the Company reported its current liabilities amounting to $1,943,449, which represents an increase of 7.09%. All of our liabilities are current and mainly include payables to related parties and third party debt which is due to various day to day operational creditors.

Following is the summary of all third party notes, net of debt discount, including the accrued interest and accrued contingency as at March 31, 2017:

Also, out of the cash fees received from different clients to date, the Company has deferred a total $200,000 from cash fees received from two clients. These deferred cash fees will be reflected on the Company´s income statement once certain milestones and contractual agreements have been completed.

Stockholder’s Equity:

At December 31, 2016, the Company had stockholders´ equity of $1,413,707. At March 31, 2017, the Company had stockholders´ equity of $1,273,074, which represents a decrease of 9.95%.

The Company had 385,654,335 and 374,475,775 common shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively.

E. Liquidity and capital reserves:

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company had a net loss of $369,017 and net cash used in operations of $111,750 for the three months ended March 31, 2017; and a working capital deficit of $1,819,676 as of March 31, 2017. It is management’s opinion that these factors may raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issue date of this report.

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 from certain related parties, such as management, and also third party funders, some of which may be 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 or converted into equity, if necessary.

Over the next 12 months, we intend to acquire several licensed financial advisory firms in U.K. and also in Asia. The possible targets have been identified. The acquisitions will form part of a new subsidiary we intend to establish in the relevant territories. These acquisitions would be, in essence, the acquisition of recurring and non-recurring long term revenues. To date, the Company has been approved as a permissible investment by a United Kingdom based Institution to provide up to, but not limited to, 2,000,000 Great Britain Pounds (USD equivalent of approximately $2.6 Million) of long term debt financing which will enable the Company to commence the acquisition of at least the first two licensed UK financial advisory firms with funds under management.

Any short fall in our projected operating revenues will be covered by:

The Company´s deferred revenue, $200,000 at March 31, 2017, 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. The Company has not granted any form of guarantee to the lenders nor can the loans become convertible into Common Shares at any point in time.

Finally, the Company believes that its HR Consultancy Business in Dubai, Kingsman James, set up in 2015, has commenced to become profitable in 2017. Kingsman James is currently tendering in excess of US$3.5 million in new business and hopes to slowly win these tenders in the coming months.

F. Business development:

To date, we have 11 clients under contract that we deem to be active and are either seeking a listing on a recognized stock exchange or seeking funding for acquisition and growth: 

Our specific plan of operations and milestones through March 2018 are as follows:

We currently are relying on introductions to potential clients by various firms and institutions based in the Middle East, South East Asia, Europe and the U.S.

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

Over the next 12 months, we intend to acquire several licensed financial advisory firms in U.K., Singapore and Hong Kong. The possible targets have been identified. The acquisitions will form part of a new subsidiary we intend to establish in the relevant territory.

During the summer of 2017, we intend to rebrand our business and analyze our entire corporate structure. We will adapt a new brand for all finance related companies that will carry through each subsidiary with a uniform image and examine the structure we currently operate to ensure its efficiency as we add new subsidiary companies. The reporting structures of each subsidiary will also be examined for maximum effect.

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. We should add at least 2 new HR consultants to the team of Kingsman James during the next 12 months.

During the next 12 months, we intend to substantially expand our Middle Eastern, South East Asian and also our U.S. 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 will explore alternative methods of servicing our clients by utilizing contacts already made in Europe to allow us to offer a wider service to our current and future clients. We will have a focus on Singapore, Cyprus and Canada for this expansion

Due to our growing U.K. and Central European based clientele and also due to our plan to acquire a certain number of U.K. based financial advisory firms with funds under management, we plan to open a new UK based office during the Summer of 2017.

Item 3. Quantitative and Qualitative Disclosures 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 repay 35,000 GBP (equivalent to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time, the Company compensated the lender with an additional 20,000 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.

During 2015 and 2016, the Company’s Dubai lawyers, Al Safar & Partners, have appealed this judgment various times based on the fact that they believed from a legal stand point that:

All prior appeals were rejected by the Dubai Courts, however a new appeal against the formal execution of this judgement was filed in September 2016 and is still pending as of the date of the filing of this report.

Aside from the foregoing matter, we are not subject to any other pending or threatened litigation.

Item 1A. Risk Factors

Not applicable.

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

On February 2, 2017, the Company issued 5,000,000 common shares valued at an agreed value of $0.01 per share or $50,000 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

On March 28, 2017, the Company issued 6,178,560 shares common shares valued at an agreed value of $0.0080925 per share or $50,000 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

On April 13, 2017, the Company issued 10,224,676 shares common shares valued at an agreed value of $0.006565 per share or $67,125 to Mammoth Corporation upon conversion of a portion of a convertible promissory 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

List of Exhibits attached or incorporated by reference pursuant to Item 601 of Regulation S-K:

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.