GBT Technologies Inc. - Annual Report: 2014 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

 1934

For the fiscal year ended: December 31, 2014

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

Commission File Number: 000-54530

GOPHER PROTOCOL, INC.

f/k/a Forex International Trading Corp

(Exact name of registrant as specified in its charter)

23129 Cajalco Road, Perris, California 92570

(Address of principal executive offices)

Issuer's telephone number: 888-426-4780  

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.00001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes  o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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 definition of “accelerated filer, large accelerated filer or smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

On June 30, 2014, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of the Common Stock held by non-affiliates of the registrant was $412,992, based upon the closing price on that date of the Common Stock of the registrant on the OTCQB maintained by OTC Markets Group Inc. of $3.00. For purposes of this response, the registrant has assumed that its directors, executive officers and beneficial owners of 5% or more of its Common Stock are deemed affiliates of the registrant.

As of April 15, 2015,  1,059,969 shares of common stock, $.00001 par value per share, of the registrant were outstanding.

Documents incorporated by reference:  None

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014

INDEX

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

In this annual report, references to “Gopher,” “Forex,” “FXIT,” “the Company,” “we,” “us,” and “our” refer to Gopher Protocol, Inc. (f/k/a Forex International Trading Corp.).

Except for the historical information contained herein, some of the statements in this report contain forward-looking statements that involve risks and uncertainties. These statements are found in the sections entitled "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures about Market Risk." They include statements concerning: our business strategy; expectations of market and customer response; liquidity and capital expenditures; future sources of revenues; expansion of our proposed product line; and trends in industry activity generally. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expect," "plan," "could," "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal," or "continue" or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including, but not limited to, the risks outlined under "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to our ability to successfully develop and market our products to customers; our ability to generate customer demand for our products in our target markets; the development of our target markets and market opportunities; our ability to manufacture suitable products at a competitive cost; market pricing for our products and for competing products; the extent of increasing competition; technological developments in our target markets and the development of alternate, competing technologies in them; and sales of shares by existing shareholders. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

Company History

Gopher Protocol, Inc. (f/k/a Forex International Trading Corp.) (the "Company", "Gopher", "we", "us" and "our"), a Nevada corporation, was established on July 22, 2009. The Company has one wholly-owned subsidiary, Direct JV Investments Inc. ("DirectJV"), a Nevada corporation, which the company formed on December 28, 2011.

The Company is developing a proprietary a consumer heuristic technology platform which connects consumers with products and services that they require in their everyday lives. The Company's technology platform provides a system and method for scheduling categorized deliverables, according to demand, at the customer's location based on smartphone application and/or via the internet Previously, the Company was principally engaged in a business which offered foreign currency market trading consulting services to non-US resident clients, professionals and retail clients. 

The Company’s common stock trades on the OTCQB maintained by OTC Markets Group Inc. under the symbol GOPH.

Recent Developments

Effective April 4, 2014, the Company filed with the State of Nevada a Certificate of Amendment to its Articles of Incorporation changing the Company’s number of authorized shares to 600,000,000. In connection with this, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority (“FINRA”). On or about September 10, 2014, the Company filed an amended Certificate of Incorporation with the Secretary of State of Nevada to increase the authorized shares to 2,000,000,000 shares. The Reverse Stock Split of 1:5,000 was approved by FINRA on October 3, 2014. All figures in this filling have been adjusted accordingly to reflect this corporate action.

On November 7, 2014, Igwekali Reginald Emmanuel was appointed by the Company to serve as the President, Chief Executive Officer, Secretary and Treasurer as well as Chairman of the Board of Directors of the Company.

On January 26, 2012, DirectJV, and Vulcan Oil & Gas Inc. ("Vulcan"), entered into an agreement whereby JV agreed to provide funding to certain alternative, green and solar energy projects that Vulcan was associated with, in exchange for a 40% interest in Vulcan's portion of such projects (the "Joint Venture"). On January 7, 2013, DirectJV, the Company and Vulcan entered into an agreement pursuant to which the parties terminated the Joint Venture and Company issued a Convertible Promissory Note to Vulcan in the aggregate principal amount of $500,000 (the "Forex Note") and, in consideration for the Company issuing the Forex Note, Vulcan issued to the Company a Secured and Collateralized Promissory Note in the principle amount of $400,000 which included the Investment (the "Vulcan Note"). Leova Dobris ("Holder") claims that prior to December 15, 2012, a debt cash investment in the amount of $50,000 (the "Vulcan Debt Investment") was made by Holder or on Holder's behalf in order to fund Vulcan and that the Company had guaranteed the Vulcan Investment made by Holder. Vulcan has since been dissolved and, prior to Vulcan's dissolution, Vulcan failed to pay Holder the Vulcan Debt Investment and assigned the Forex Note to Holder. Holder has threatened to commence litigation against the Company in connection with its claimed guarantee of the Vulcan Debt Investment and to proceed with litigation against the Company in connection with the Forex Note. On November 14, 2014, the Company entered into a Settlement Agreement with Holder pursuant to which the Company, in consideration of a full release from and against any and all claims, agreed to issue to Holder 1,000,000 pre-split shares of restricted common stock (the "Settlement Shares") at a cost basis of $0.12 per share representing aggregate consideration of $120,000 (200 shares post-split). Holder may, at any time prior to June 30, 2015, convert the Settlement Shares into Series D Preferred Shares with a stated value of $120,000, a conversion price of $0.12 and liquidation and dividend rights to be determined.

On January 22, 2015, the Company entered into an Exchange Agreement with Vladimir Kirish pursuant to which Mr. Kirish converted $197,717.22 in debt payable by the Company into 50,000,000 restricted shares of common stock (the “Kirish Shares”). Mr. Kirish acquired the debt from a third party. Mr. Kirish subsequently transferred his shares to a third party.

On January 22, 2015, the Company entered into an Exchange Agreement with GV Global Communications Inc. (“GV Global”) pursuant to which GV Global exchanged $75,273 in debt into a 10% Convertible Debenture in the principal amount of $75,273 (the “GV Note”). The GV Note matures January 21, 2017 (the "Maturity Date") and interest associated with the GV Note is 10% per annum, which is payable on the Maturity Date. The GV Note is convertible into shares of common stock of the Company, at the option of GV Global, at a conversion price of $0.00752734. GV Global has agreed to restrict its ability to convert the GV Note and receive shares of common stock such that the number of shares of common stock held by it in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.  In addition, on March 2, 2015, the Company and GV Global Communications, Inc. ("GV") amended that certain 10% Convertible Debenture (the "GV Debenture") which debt underlying the GV Debenture was initially incurred on October 6, 2009 and exchanged for the GV Debenture on January 19, 2014. The parties agreed that the conversion price in the GV Debenture will not be impacted by the 1:1,000 stock split implemented by the Company on February 24, 2015 and will remain $0.0075273.

On February 2, 2015, the transfer agent for the Company issued Blackbridge Capital, LLC ("Blackbridge") 969 post-split (4,843,398 pre-split) shares of common stock (the "Blackbridge Shares") upon Blackbridge submitting a conversion notice converting a Convertible Promissory Note (the "Blackbridge Note") in the principal amount of $90,000 plus interest. The Blackbridge Shares were issued without a standard restrictive legend as Blackbridge delivered a legal opinion to remove the restrictive legend under Rule 144 together with the conversion note. The Company believes that Blackbridge was in breach of the agreements entered with the Company in June 2014. The Company is contemplating commencing litigation against Blackbridge in connection with this matter.

On February 17, 2015, the Company filed a Certificate of Change (the “Certificate”) with the State of Nevada to effect a reverse stock split of its outstanding and authorized shares of common stock at a ratio of 1 for 1,000 (the “Reverse Stock Split”). Fractional shares that resulted from the Reverse Stock Split will be rounded up to the next highest number. The Certificate was approved by the Board of Directors of the Company. The effective date of the Reverse Stock Split was February 23, 2015. In addition, the Company filed Articles of Merger (the “Articles”) with the Secretary of State of the State of Nevada to effectuate a name change. The Articles were filed to effectuate a merger between Gopher Protocol Inc., a Nevada corporation and a wholly-owned subsidiary of the Company, and the Company, with the Company being the surviving entity. As a result, the Company’s name changed from “Forex International Trading Corp.” to “Gopher Protocol Inc.”. In connection with the above, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority. The Reverse Stock Split will be implemented by FINRA on February 23, 2015. Our new CUSIP number is 38268V 108 and our new symbol is “GOPH”.

On March 4, 2015, the Company entered into a Territorial License Agreement (the “License Agreement”) with Hermes Roll LLC (“Hermes”), a Nevada limited liability company currently being formed. Pursuant to the License Agreement, Hermes will license to the Company, on an exclusive basis in the State of California, certain intellectual property relating to Hermes's system and method for scheduling categorized deliverables, according to demand, at the customer’s location based on smartphone application and/or via the internet, in consideration of 100,000 shares of Series D Preferred Stock of the Company (the “Preferred Shares”). The Preferred Shares have no liquidation rights. The Holder of the Preferred Shares will be entitled to vote on all matters submitted to shareholders of the Company on an as-converted basis. The Preferred Shares have a conversion price of $0.01 (the "Conversion Price") and a stated value of $10.00 per share (the “Stated Value”). Subject to the Company increasing its authorized shares of common stock to 500,000,000, each Preferred Share is convertible, at the option of the Holder, into such number of shares of common stock of the Company as determined by dividing the Stated Value by the Conversion Price.

GopherProtocol is a heuristic-based technology platform that connects consumers with the products and services they need through a novel way of master scheduling deliverables according to demand at the customer’s location based on a smartphone application, the internet or by phone call.

We are presently developing the following applications for use in the State of California:

In February 2015, the Company filed a Certificate of Change (the “Certificate”) with the State of Nevada to decrease the authorized shares of common stock, par value $0.00001 per share (the “Common Stock”), of the Company from 2,000,000,000 shares to 2,000,000 shares.

On March 20, 2015 the Company filed information statement pursuant to section 14 of The Securities Exchange Act Of 1934 and regulations 14C and schedule 14C thereunder, to amend the Company's Certificate of Incorporation, (the “Articles of Incorporation”) to increase the number of authorized shares of common stock, par value $0.00001 per share (the “Common Stock”), of the Company from 2,000,000 shares to 500,000,000 shares.

Operations

As of December 31, 2014, the Company was focused on consulting in the trading of foreign currency, as well as reviewing and facilitating acquisitions of companies with promising business models. On March 4, 2015, the Company entered into the License Agreement with Hermes. Pursuant to the License Agreement, Hermes licensed to the Company, on an exclusive basis in the State of California, certain intellectual property relating to Hermes's system and method for scheduling categorized deliverables, according to demand, at the customer’s location based on smartphone application and/or via the internet. The Company is presently developing commercial applications for this technology and is no longer pursuing the consulting in the trading of foreign currency.

Corporate Headquarters

Our headquarters are located at 23129 Cajalco Road, Perris, CA 92570. The Company pays no office rent, but being billed for minimal office expenses.

Employees

As of December 31, 2014, we had no employee.

Officer and Directors

As of December 31, 2014, Igwekali Reginald Emmanuel was the Company's sole Director, President, Chief Executive Officer, Secretary and Treasurer as well as the Chairman of the Board of Directors of the Company.  

Available Information

All reports of the Company filed with the SEC are available free of charge through the SEC’s web site at www.sec.gov. In addition, the public may read and copy materials filed by the Company at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain additional information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

ITEM 1A. RISK FACTORS

As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item 1A. Risk Factors.  Despite the fact that we are not required to provide risk factors, we consider the following factors to be risks to our continued growth and development:

We will be required to raise additional capital in order to implement any growth plans.

We plan to raise working capital that will allow us to conduct our business for the next twelve months. There is no guarantee regarding our ability to raise that capital. If adequate funds are not available, we may not be able to fund our expansion, take advantage of acquisition opportunities, develop or enhance products or services, respond to competitive pressures or maintain our public filings. Such inability could have a material adverse effect on our business, results of operations and financial condition.

We may need and be unable to obtain additional funding on satisfactory terms, which could dilute our shareholders or impose burdensome financial restrictions on our business.

Unforeseeable circumstances may occur which could compel us to seek additional funds. Furthermore, future events, including the problems, delays, expenses and other difficulties frequently encountered by start-up companies may lead to cost increases that could make the net proceeds of this offering insufficient to fund our proposed business plan. Thus, the proceeds of the offering may be insufficient to accomplish our objectives and we may have to borrow or otherwise raise additional funds to accomplish such objectives. We may seek additional sources of capital, including an additional offering of our equity securities, an offering of debt securities or obtaining financing through a bank or other entity. This may not be available on a timely basis, in sufficient amounts or on terms acceptable to us. Our inability to raise additional equity capital or borrow funds required to affect our business plan, may have a material adverse effect on our financial condition and future prospects. Additionally, to the extent that further funding ultimately proves to be available, both debt and equity financing involve risks. Debt financing may require us to pay significant amounts of interest and principal payments, reducing the resources available to us to expand our existing businesses. Some types of equity financing may be highly dilative to our stockholders' interest in our assets and earnings. Any debt financing or other financing of securities senior to common stock will likely include financial and other covenants that will restrict our flexibility.

We will have inadequate capital to pay significant additional expenses we expect to incur as a public company and, as a result, we will be required to raise additional capital further diluting investors that participated in prior offerings.

We are a reporting company subject to the requirements of the Exchange Act.  In order to comply with such reporting requirements, we will incur additional administrative expenses including substantial legal and accounting expenses.  We expect such fees to be approximately $150,000 per year.  As a result, we will be required to raise additional debt or equity financing, of which there is no guarantee that such financing will be available or available on acceptable terms.  If we are required to raise additional funds or do not deploy our capital in the appropriate manner and if we raise such proceeds in the form of equity, our shareholders will be further diluted.

Our success will be dependent on attracting key and other personnel, particularly in the areas of management, technical services and customer support.

We believe that our success will depend on the continued efforts of management for the development of our platform and to pursue financial transactions to earn a return on capital. Such experience will be important to the establishment of our business. Our success also depends on having highly trained technical and customer support personnel.

We may have difficulty attracting and employing members to our senior management team and sufficient technical and customer support personnel to keep up with our growth needs. This shortage could limit our ability to increase sales and to sell services. Competition for personnel is intense. If we cannot hire suitable personnel to meet our growth needs, our business and operations will be negatively affected.

We may not be able to make future acquisitions and new strategic alliances, and, even if we do, such acquisitions and alliances may disrupt or otherwise negatively affect our business.

 
Our business plan contemplates that we may make acquisitions.  Future acquisitions are subject to the following risks:

In addition, we will face competition from other parties, including large public and private companies, venture capital firms, and other companies, in our search for suitable acquisitions and alliances. Many of the companies we will compete with for acquisitions have substantially greater name recognition and financial resources than we have, which may limit our opportunity to acquire interests in new companies, technologies and assets or create strategic alliances. Even if we are able to find suitable acquisition candidates or develop acceptable strategic alliances, doing so may require more time and expense than we expect because of intense competition.

Anti-takeover provisions and our right to issue preferred stock could make a third party acquisition of us difficult.

 
The Company is a Nevada corporation. Anti-takeover provisions of Nevada law tend to make it difficult for a third party to acquire control of us, even if a change in control would be beneficial to our shareholders. In addition, our board of directors may issue preferred stock with voting or conversion rights that may have the effect of delaying, deferring or preventing a change of control. Preventing a change of control could adversely affect the market price of Gopher common stock and the voting and other rights of holders of Gopher common stock.

Our common stock price is highly volatile.

The market price of our common stock is highly volatile, as the stock market in general, and the market for Internet-related and technology companies in particular, has been highly volatile. Our shareholders may not be able to resell their shares of our common stock following periods of volatility because of the market's adverse reaction to this volatility.  Factors that could cause this volatility may include, among other things:

•           announcements of technological innovations and the creation and failure of B2B marketplaces;

•           actual or anticipated variations in quarterly operating results;

•           new sales formats or new products or services;

•           changes in financial estimates by securities analysts;

•           conditions or trends in the Internet, B2B and other industries;

•           changes in the market valuations of other Internet companies;

•           announcements by us or our competitors of significant acquisitions, strategic partnerships or joint ventures;

•           changes in capital commitments;

•           additions or departures of key personnel;

•           sales of our common stock; and

•           general market conditions.

Many of these factors are beyond our control.

ITEM 1B. UNRESOLVED STAFF COMMENTS

As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item

1B. Unresolved Staff Comments. At this time, there are no unresolved staff comments.

ITEM 2. PROPERTIES

Our headquarters are located at 23129 Cajalco Rd., Perris, CA 92570. The Company pays no office rent, but being billed for minimal office expenses.

ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business.  There is currently no litigation that management believes will have a material impact on the financial position of the Company.

ITEM 4. MINE SAFERY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

On December 29, 2010, our common stock began trading on the OTCQB under the symbol “FXIT”.   The Company is authorized to issue 2,000,000 shares of common stock, $0.00001 par value (the “Common Stock”). As of December 31, 2014, 155,672 shares of common stock (777,871,630 shares prior to the 5,000 to 1 reverse split), as well as 45,000 shares of preferred stock  Series B and 700 shares of preferred stock Series C were issued and outstanding. As of April 15, 2015, 1,059,969  shares of common stock, as well as 45,000 shares of preferred stock Series B, 700 shares of preferred stock Series C and 100,000 preferred stock Series D were issued and outstanding. The Board of Directors reserves the right to issue shares of preferred stock in the future indicating preference or rights as appropriate. On March 20, 2015, the Company filed information statement pursuant to Section 14 of the Securities Exchange Act of 1934 to amend the Company's Certificate of Incorporation, (the “Articles of Incorporation”) to increase the number of authorized shares of Common Stock of the Company from 2,000,000 shares to 500,000,000 shares.

Market Information

Our common stock is now quoted on OTCQB under the symbol “GOPH”. The following table is indicative of the fluctuations in the stock price:   

The Company’s transfer agent since inspection and as of December 31, 2014 is Empire Stock Transfer, Inc.

Record Holders

The number of active holders of record for our common stock as of the date of filing was approximately 49, on December 31, 2014 was approximately 46, and as of December 31, 2013 approximately 44.

Dividends

The Company has not yet adopted any policy regarding payment of dividends.  No dividends have been paid or declared since the Date of Inception.

Securities Authorized for Issuance Under Equity Compensation Plans

We presently do not have equity compensation plans authorized.

Penny Stock

Our common stock is considered "penny stock" under the rules the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market System, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that:

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with:

In addition, the penny stock rules that require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.

This disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

Recent Issuances of Unregistered Securities

Authorized Shares

On September 26, 2012, the Company authorized 10,000 Preferred Stock Series C shares, par value $0.00001.

Effective April 4, 2014, the Company filed with the State of Nevada a Certificate of Amendment to Articles of Incorporation changing the Company’s number of authorized shares to 600,000,000. In September of 2014, the Company filed an amended Certificate of Incorporation with the Secretary of State of Nevada to increase the authorized shares to 2,000,000,000 shares. The Company has 2,00,000,000 authorized shares of its $0.00001 par value common stock and 20,000,000 shares of its $0.00001 par value Preferred Stock Series B as of December 31, 2014 and 2013, respectively.

In connection with the increase in shares, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority (“FINRA”). The Reverse Stock Split of 1:5000 was implemented by FINRA on October 3, 2014.

Effective February 17, 2015, the Company filed with the State of Nevada a Certificate of Change to effect a reverse stock split of its outstanding and authorized shares of common stock at a ratio of 1 for 1,000. The effective date of the Reverse Stock Split was February 24, 2015.

On March 20, 2015 the Company filed information statement pursuant to Section 14 of the Securities Exchange Act of 1934 to increase the number of authorized shares of Common Stock of the Company from 2,000,000 shares to 500,000,000 shares

Common Shares:

On September 2, 2013, effective September 1, 2013, the Company entered into an Evaluation License Agreement (the "ELA") with Micrologic Design Automation, Inc. ("MDA"), pursuant to which MDA temporarily licensed to the Company, on a non-exclusive and royalty-free basis, certain technology and related materials for any purpose related to evaluating NanoDRC, NanoRV and NanoLVS technology (the “Technology”).  On January 2, 2014, and effective December 31, 2013, the Company and MDA signed a letter agreement whereby MDA provided for a perpetual, royalty free, exclusive license of the Licensed Technology, as defined in the Evaluation License Agreement dated September 1, 2013, in exchange for 40,000 post split (200 million pre-split) shares of common stock (the “Shares”) of the Company.  MDA is not permitted to sell, assign, hypothecate or transfer the Shares in any way prior to the Company generating at minimum $50,000 in revenue through the use of the Technology (the “Revenue Target”).  A stop transfer legend shall be affixed to the certificate representing the Shares.  If the Revenue Target is achieved, then such stop transfer legend shall be removed.  The shares of common stock were issued under Section 4(2) of the Securities Act of 1933, as amended. On or about January 5, 2015, and effective December 31, 2014, the Company and MDA signed cancelation agreement in connection with ELA. MDM returned its stock certificate and the Company return it to transfer agent for cancelation.

During the fiscal year ended December 31, 2014, Financier 1 converted $44,200 of its July 2013 Note into 6,399 post split (31,994,477 pre-split) shares of common stock at an average conversion price of $0.0014 per share, representing the entire remaining note balance, and released the company from its debt. On or about June 3, 2014, the Company issued another note to the Financier payable for $32,500 (“September 2014 Note”), of which $2,500 was for legal fees associated with the transaction. The terms of the new note were similar to the terms of prior note. On January 30, 2015, Financier 1 converted $10,000 of its June 2014 Note into 115 post split (574,713 pre-split) shares of common stock at an average conversion price of $0.0174 per share. On March 6, 2015, Financier 1 converted $1,170 of its June 2014 Note into 2,996 post the new 1000:1split shares of common stock at an average conversion price of $0.3905 per share. The remaining balance of the note in the sum of $21,330 was sold by said investor during March 2015 to a third party in a deal that the Company is not a part to.

During the fiscal year ended December 31, 2014, Financier 2 converted $66,178 of its note into 64,400 post split (322,000,000 pre-split) shares of common stock at an average conversion price of $0.00021 per share.

During the fiscal year ended December 31, 2014, GV Global Communications, Inc converted 7,770 of its Series C Preferred Stock into 12,910 post-split (64,551,667 pre-split) common shares. In addition, the Company issued 4,204 additional common shares (21,021,900 shares pre-split) to settle calculation differences on conversions.

On or about November 14, 2014 the Company and the holder of the Vulcan note entered into settlement agreement terminate any and all agreements between them and to resolve all disputes existing between them, which are the subject of Holder’s draft complaint which has yet to be filed, upon the terms and conditions of which the Company will issue the Holder 200 post-split shares (1,000,000 pre-split shares) of common stock (the “Settlement Shares”) at a cost basis of $0.12 per share representing aggregate consideration of $120,000 (the “Settlement Amount”). The stock certificate representing the Settlement Shares shall bear the standard 1933 Act restrictive legend. Holder, at its sole option, at any time prior to June 30, 2015, may convert the Settlement Shares into Series D Preferred Shares with a stated value of $120,000, a conversion price of $0.12 and liquidation and dividend rights to be determined.

On January 22, 2015, the Company entered into an Exchange Agreement with Vladimir Kirish pursuant to which Mr. Kirish converted $197,717.22 in debt payable by the Company into post-split 50,000,000 restricted shares of common stock (the "Kirish Shares"). Mr. Kirish acquired the debt from a third party. The Kirish Shares were issued to Mr. Kirish in reliance upon exemptions from registration pursuant to Section 3(a)(9) under the Securities Act of 1933. Mr. Kirish is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

On January 22, 2015, the Company entered into an Exchange Agreement with GV Global Communications Inc. ("GV Global") pursuant to which GV Global exchanged $75,273 in debt into a 10% Convertible Debenture in the principal amount of $75,273 (the "GV Note"). The GV Note matures January 21, 2017 (the "Maturity Date") and interest associated with the GV Note is 10% per annum, which is payable on the Maturity Date. The GV Note is convertible into shares of common stock of the Company, at the option of GV Global, at a conversion price of $0.00752734. GV Global has agreed to restrict its ability to convert the GV Note and receive shares of common stock such that the number of shares of common stock held by it in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The GV Note was issued to GV Global in reliance upon exemptions from registration pursuant to Section 3(a)(9) under the Securities Act of 1933. GV Global is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933. In addition, on March 2, 2015, the Company and GV Global Communications, Inc. ("GV") amended that certain 10% Convertible Debenture (the "GV Debenture") which debt underlying the GV Debenture was initially incurred on October 6, 2009 and exchanged for the GV Debenture on January 19, 2014. The parties agreed that the conversion price in the GV Debenture would not be impacted by the 1:1,000 stock split implemented by the Company on February 24, 2015 and will remain $0.0075273.

On January 22, 2015, the Company entered into an Agreement with a law firm pursuant to which the Company issued post split 3,200,000 shares of common stock to Fleming PLLC in consideration of the forgiveness of trade debt payable by the Company in the amount of $32,000. The law firm was an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933. The transaction was voided and the law firm returned the shares to the Company’s transfer agent for cancellation.

On February 2, 2015, the transfer agent for the Company issued Blackbridge Capital, LLC ("Blackbridge") 969 post-split (4,843,398 pre-split) shares of common stock (the "Blackbridge Shares") upon Blackbridge submitting a conversion notice converting a Convertible Promissory Note (the "Blackbridge Note") in the principal amount of $90,000 plus interest. The Blackbridge Shares were issued without a standard restrictive legend as Blackbridge delivered a legal opinion to remove the restrictive legend under Rule 144 together with the conversion note. The Company believes that Blackbridge was in breach of the agreements entered with the Company in June 2014. The Company is contemplating commencing litigation against Blackbridge in connection with this matter.

On or about October 3, 2014, the Company implemented a 5,000-1 reverse split, with no fractional shares allowed.

On or about February 24, 2015, the Company implemented a 1,000-1 reverse split, with no fractional shares allowed.

Treasury Stock

On April 25, 2011, the Company issued a press release announcing that its Board of Directors approved a share repurchase program. Under the program, the Company is authorized to purchase up to 200-post split (1,000,000 pre-split) of its shares of common stock in open market transactions at the discretion of management. All stock repurchases will be subject to the requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended and other rules that govern such purchases. As of December 31, 2013, the Company had repurchased 8-post split shares (38,000 pre-split) shares of its common shares in the open market, which were returned to treasury. On December 31, 2014, the Company returned 40,000 post-split shares (200,000,000 pre-split shares) to treasury in connection with the dissolution of the licensing agreement with Micrologic.

Series B Preferred Shares

On November 1, 2011, the Company and certain creditors entered into a Settlement Agreement (the "Settlement Agreement") whereby without admitting any wrongdoing on either part, the parties settled all previous agreements and resolved any existing disputes. Under the terms of the Settlement Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred Stock of the Company on a pro-rata basis. Following the issuance and delivery of the shares of Series B Preferred Stock to said creditors, as well as surrendering the undelivered shares, the Settlement Agreement resulted in the settlement of all debts, liabilities and obligations between the parties.

The Series B Preferred Stock has a stated value of $100 per share and is convertible into the Company’s common stock at a conversion price of $0.30 per share representing 3,000 posts split (15,000,000 pre-split) common shares. Furthermore, the Series B Preferred Stock votes on an as converted basis and carries standard anti-dilution rights. These rights were subsequently removed, except in cases of stock dividends or splits.

Series C Preferred Shares

On April 29, 2011, GV Global Communications, Inc. (“GV”) provided funding to the Company in the aggregate principal amount of $111,000 (the “Loan”).  On September 25, 2012, the Company and GV entered into a Conversion Agreement pursuant to which the Company agreed to convert the Loan into 10,000 shares of Series C Preferred Stock of the Company, which was approved by the Board of Directors.

Each share of Series C Preferred Stock is convertible, at the option of GV, into such number of shares of common stock of the Company as determined by dividing the Stated Value (as defined below) by the Conversion Price (as defined below).  The Conversion Price for each share is equal to a 50% discount to the average of the lowest three lowest closing bid prices of the Company’s common stock during the 10 day trading period prior to the conversion with a minimum conversion price of $0.002.  The stated value is $11.00 per share (the “Stated Value”).  The Series C Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series C Preferred Stock shall be entitled to one vote for each share of common stock that the Series C Preferred Stock shall be convertible into.   GV has contractually agreed to restrict its ability to convert the Series C Preferred Stock and receive shares of the Company's common stock such that the number of shares of the Company's common stock held by it and its affiliates after such conversion does not exceed 4.9% of the then issued and outstanding shares of the Company's common stock.

During the fiscal year ended December 31, 2014, GV Global Communications, Inc converted 7,770 of its Series C Preferred Stock into 12,010 post split (64,551,667 common shares pre-split). During the third quarter of 2014, the Company issued 4,204 post-split (21,021,900 pre-split) common shares to adjust the shares issued to reflect the amount that both they and the Company believed that they were owed.

The issuance of the Series C Preferred Stock was made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder.  GV is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

Series D Preferred Shares

On March 4, 2015, the Company entered into a Territorial License Agreement (the "License Agreement") with Hermes Roll LLC ("Hermes"), a Nevada limited liability company currently being formed. Pursuant to the License Agreement, Hermes will license to the Company, on an exclusive basis in the State of California, certain intellectual property relating to Hermes's system and method for scheduling categorized deliverables, according to demand, at the customer's location based on smartphone application and/or via the internet, in consideration of 100,000 shares of Series D Preferred Stock of the Company (the "Preferred Shares"). The Preferred Shares have no liquidation rights. The Holder of the Preferred Shares will be entitled to vote on all matters submitted to shareholders of the Company on an as-converted basis. The Preferred Shares have a conversion price of $0.01 (the "Conversion Price") and a stated value of $10.00 per share (the "Stated Value"). Subject to the Company increasing its authorized shares of common stock to 500,000,000, each Preferred Share is convertible, at the option of the Holder, into such number of shares of common stock of the Company as determined by dividing the Stated Value by the Conversion Price. The issuance of the Preferred Shares was made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder. Hermes is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

ITEM 6. SELECTED FINANCIAL DATA

As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item 6. Selected Financial Data.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. In addition to historical information, this discussion includes forward-looking information that involves risks and assumptions, which could cause actual results to differ materially from management's expectations. See "Forward-Looking Statements" included in this report.

Territorial License Agreement

On March 4, 2015, the Company entered into a Territorial License Agreement (the "License Agreement") with Hermes Roll LLC ("Hermes"), a Nevada limited liability company currently being formed. Pursuant to the License Agreement, Hermes will license to the Company, on an exclusive basis in the State of California, certain intellectual property relating to Hermes's system and method for scheduling categorized deliverables, according to demand, at the customer's location based on smartphone application and/or via the internet, in consideration of 100,000 shares of Series D Preferred Stock of the Company (the "Preferred Shares"). The Preferred Shares have no liquidation rights. The Holder of the Preferred Shares will be entitled to vote on all matters submitted to shareholders of the Company on an as-converted basis. The Preferred Shares have a conversion price of $0.01 (the "Conversion Price") and a stated value of $10.00 per share (the "Stated Value"). Subject to the Company increasing its authorized shares of common stock to 500,000,000, each Preferred Share is convertible, at the option of the Holder, into such number of shares of common stock of the Company as determined by dividing the Stated Value by the Conversion Price.

Results of Operations:

Fiscal year ended December 31, 2014 and 2013

A comparison of the consolidated statements of operations for the twelve months ended December 31, 2014 and 2013 is as follows:

Revenues:

The following table summarizes our revenues for the fiscal year ended December 31, 2014 and 2013:

The Company was able to leverage its consulting expertise in the area of foreign exchange during the fiscal year of 2014. There is no significant difference in revenue between fiscal years 2014 and 2013.

Operating expenses:

The following table summarizes our operating expenses for the fiscal year ended December 31, 2014 and 2013:

The Company recognized certain costs in fiscal year 2014 associated with resolving certain notes payable and assumed certain costs associated with converting those debts to shares of the Company. The Company made the decision to refine its capital structure and reduce its debt to equity ratio.

Other income (expenses):

The following table summarizes our other income (expenses) for the fiscal year ended December 31, 2014 and 2013:

The Company had a note receivable from Vulcan at 10% per annum with a face value of $400,000, and therefore accrued $48,789 of interest income in 2014 as compared to $40,000 in interest income in 2013.

In 2013, the Company amortized $100,000 in debt discounts as a result of the loan restructuring completed in 2012, and wrote off $98,248 in notes receivable that were deemed to be uncollectible in 2013. In 2014, the Company recognized the value of a derivative liability as income due to the expiration of the derivative liability due to the note is in default. In 2014, the Company recognized the loss on the settlement of the note receivable and note payable to/from Vulcan.

Liquidity and Capital Resources

Our cash and cash equivalents were $0 and $0 for the periods ended December 31, 2014 and 2013.

Our financial statements have been prepared on the basis that it is a going concern, which contemplates the realization of additional income and the satisfaction of liabilities in the normal course of business. At December 31, 2014, the Company has a negative working capital of $455,688, and an accumulated deficit of $2,412030. This raises substantial doubt about its ability to continue as a going concern.

Cash used by operating activities for the fiscal year ended December 31, 2014 and 2013 was $63,945, and $52,499, respectively. There is no significant difference between the periods.

Cash provided by investing activities for the fiscal year ended December 31, 2014 and 2013 was $0 and $0, respectively.

Cash provided by financing activities for the fiscal year ended December 31, 2014 and 2013 was $63,945 and $51,881, respectively. There is no significant difference between the periods.

We plan to raise working capital that will allow us to conduct our business for the next twelve months. There is no guarantee regarding our ability to raise that capital. We expect to use the proceeds to fund our short-term capital requirements including paying administrative expenses associated with maintaining our public company’s filings for the next 12 months. In order to implement our business plan and pay various administrative expenses on a minimal basis for the next 12 months, we expect that we will need approximately $150,000. The Company expects that its operating results will fluctuate significantly from quarter to quarter in the future and will depend on a number of factors including the state of the worldwide economy and financial markets, which are outside the Company's control.

Debt Financing Arrangements

At December 31, 2014 and 2013, notes payable and accrued interest consisted of:

a) Convertible Notes Payable

On October 6, 2009, the Company signed a note payable for $25,000 to Rasel Ltd due on October 6, 2010, bearing interest at 4% per annum. The proceeds were used to pay for half of existing accounts payable for legal fees incurred at the Company’s inception. On October 20, 2009, the Company signed a note payable for $50,000 payable to Rasel due on October 20, 2010, bearing interest at 4% per annum (collectively, the “Rasel Note”). These proceeds were used to pay for startup costs, audit fees and future expenses. On January 22, 2010, the Company signed a note payable for $50,000 payable to Rasel due on October 30, 2011, bearing interest at 4% per annum. These proceeds were used for working capital and expenditures. On January 22, 2010, the Company signed an amendment to extend the maturity date of the promissory notes in the amount of $25,000 and $50,000 dated October 6, 2009 and October 20, 2009, respectively, to October 30, 2011. On March 2, 2011, the Company and Rasel agreed to extend the maturity of all notes to December 31, 2012, in consideration of adding a conversion feature to the notes with either a 5% discount to the market price or a fixed price of $0.60. The extension of maturity was effective as of December 30, 2010.

About 50% of the note balance at December 31, 2013 ($73,812.50) was paid off in 2014 by Financier 2. On January 22, 2015, the Company entered into an Exchange Agreement with GV Global Communications Inc. ("GV Global") – which hold the 50% of the remaining balance of the note in default, pursuant to which GV Global exchanged $75,273 in debt into a 10% Convertible Debenture in the principal amount of $75,273 (the "GV Note"). The GV Note matures January 21, 2017 (the "Maturity Date") and interest associated with the GV Note is 10% per annum, which is payable on the Maturity Date. The GV Note is convertible into shares of common stock of the Company, at the option of GV Global, at a conversion price of $0.00752734. GV Global has agreed to restrict its ability to convert the GV Note and receive shares of common stock such that the number of shares of common stock held by it in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The GV Note was issued to GV Global in reliance upon exemptions from registration pursuant to Section 3(a)(9) under the Securities Act of 1933. GV Global is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933. In addition, on March 2, 2015, the Company and GV Global Communications, Inc. ("GV") amended that certain 10% Convertible Debenture (the "GV Debenture") which debt underlying the GV Debenture was initially incurred on October 6, 2009 and exchanged for the GV Debenture on January 19, 2014. The parties agreed that the conversion price in the GV Debenture would not be impacted by the 1:1,000 stock split implemented by the Company on February 24, 2015 and will remain $0.0075273.

The Company has accrued $1,248 of interest expense in 2014 in connection with this note.

b) Note Payable

On December 31, 2012, the Company converted a payable in the amount of $155,542 to a note payable. The note bears annual interest at 10%, and was to mature on December 31, 2012. The Company has negotiated an extension to the maturity date until December 31, 2013. The note is currently in default: the Company will attempt to reach an amicable settlement with the counterparty. The balance at December 31, 2014 and December 31, 2013, including accrued interest, is $43,464 and $97,552, respectively. The note was reduced for revenue during the fiscal year December 31, 2014 from the note holder. The Company has accrued $4,475 of interest expense in 2014 in connection with this note.

c) Issuance of note payable to third party

On July 24, 2013, the Company entered into a Securities Purchase Agreement with a third party financing source ("Financer 1"), for the issuance of an 8% convertible note in the principal amount of $42,500 (the "July 2013 Note"), of which $2,500 was for legal fees associated with the transaction.  The financing closed on July 31, 2013.

The July 2013 Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on April 29, 2014.  The July 2013 Note is convertible into common stock, at Financer’s option, at the greater of a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion or $0.00009.  In the event the Company prepays the July 2013 Note in full, the Company is required to pay to Financer an amount in cash equal to all principal, interest and any other amounts owing multiplied by (i) 112% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 121% if prepaid 31 days following the closing through 60 days following the closing and (iii) 126% if prepaid 61 days following the closing through 90 days following the closing and (iv) 131% if prepaid 91 days following the closing through 120 days following the closing and (v) 136% if prepaid 121 days following the closing through 150 days following the closing and (vi) 141% if prepaid 151 days following the closing through 180 days following the closing. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.   Financer has agreed to restrict its ability to convert the July 2013 Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 9.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company received from this offering were $42,500, less $2,500 in attorney’s fees. As of the date of the July 2013 Note, the Company is obligated on the Note issued to Financer in connection with the offering. The July 2013 Note is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company.  The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended  (the "Act") for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated there under since, among other  things,  the  transaction  did not involve a public  offering,  Financer is an accredited  investor, Financer had access to information about the Company  and their  investment,  Financer  took the  securities  for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

In April 2014, Financier converted the entire remaining note balance, and released the company from its debt, which is a zero balance. On or about June 3, 2014, the Company issued another note to the Financier payable for $32,500 (“June 2014 Note”), of which $2,500 was for legal fees associated with the transaction. The terms of the new note were similar to the terms described above, with a maturity of March 5, 2015.

The June 2014 Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on maturity.  The June 2014 Note is convertible into common stock, at Financer’s option, at the greater of a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion or $0.00001.  In the event the Company prepays the June 2014 Note in full, the Company is required to pay to Financer an amount in cash equal to all principal, interest and any other amounts owing multiplied by (i) 112% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 121% if prepaid 31 days following the closing through 60 days following the closing and (iii) 126% if prepaid 61 days following the closing through 90 days following the closing and (iv) 131% if prepaid 91 days following the closing through 120 days following the closing and (v) 136% if prepaid 121 days following the closing through 150 days following the closing and (vi) 141% if prepaid 151 days following the closing through 180 days following the closing. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.   

Financer has agreed to restrict its ability to convert the June 2014 Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company received from this offering were $32,500, less $2,500 in attorney’s fees pursuant to the terms of this convertible agreement. As of the date of the June 2014 Note, the Company is obligated on the Note issued to Financer in connection with the offering. The June 2014 Note is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. 

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended  (the "Act") for the private placement  of these  securities  pursuant  to  Section  4(2) of the Act  and/or  Regulation  D promulgated  there under since,  among other  things,  the  transaction  did not involve a public  offering,  Financer is an accredited  investor, Financer had access to information about the Company  and their  investment,  Financer  took the  securities  for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

In 2014, the Company accrued $1,734 of interest expense in connection with the July 2013 and the June 2014 Note. As of December 31, 2014, the June 2014 Note is in default; the Company anticipates that Financier will convert their debt into common shares.

d) Third Party Note Payable

On May 13, 2014, the Company entered into an agreement with a third party financing source ("Financier 2"), for the issuance of an 8% convertible note in the principal amount of $147,625 (the "May 2014 Note").  In conjunction with the issuance of the May 2014 Note, an existing note holder (Rasel, owner of the Rasel Notes) agreed to have the proceeds of the May 2014 Note used to offset the amounts owed to them as evidenced by the Assignment of Convertible Debenture agreement dated May 12, 2014, between the holders of the Rasel Notes and Financier 2. The Assignment of Convertible Debenture agreement calls for the Financier 2 to make two payments of $73,813 each to the existing note holder (Rasel Notes). On May 13, 2014, the Financier 2 made the first payment to the existing note holder (Rasel Notes), however, Financier 2 defaulted on their obligation to make the second payment per the Assignment of Convertible Debenture agreement. As a result, the Company and Financier 2 have mutually agreed to release Financier 2 from its’ obligation for the second payment, and the other half of the note in the amount of $73,812 reverted back to Rasel.

The May 2014 Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on September 1, 2014.  The May 2014 Note is convertible into common stock, at Financer 2’s option, at the greater of a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion or $0.0001.  

Financer 2 has agreed to restrict its ability to convert the May 2014 Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.   As of the date of the May 2014 Note, the Company is obligated on the Note issued to Financer 2 in connection with the offering. The May 2014 Note is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. 

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended  (the "Act") for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated there under since, among other things, the transaction did not involve a public offering, Financer is an accredited investor, Financer had access to information about the Company and their investment, Financer took the securities  for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

During the fiscal year ended December 31, 2014, Financier 2 converted 64,400 post-split (322,000,000 pre-split) shares at an average valuation of approximately $0.98 on a post-split basis. The Company has accrued $957 in interest expense in 2014 in connection with this note. As of December 31, 2014, the balance of the note including accrued interest is $8,592.

e) Convertible note payable to Blackbridge

On June 16, 2014, the Company entered into a set of agreements (collectively, the “Blackbridge Agreement”) with Blackbridge, a financial services firm. The Company and Blackbridge were discussing an equity line of credit, and the Company agreed to pay Blackbridge a commitment fee of 90,000,000 shares (18,000 shares post-split), and also issued a convertible note for $90,000 having a 5% interest rate that matures on December 16, 2014. The note can be converted after the maturity date. The conversion price is 90% multiplied by the market price, which is defined in the agreement as the lowest of the daily trading price for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion date.

The` Company computed the fair value of the conversion feature at the commitment date, based on the following management assumptions:

The fair value of the embedded conversion option on the commitment date was $7,238. The Company recorded a related debt discount of $7,238, which is amortized over the life of the debt. For the fiscal year ended December 31, 2014, the Company amortized $7,238 of debt discount.

At December 31, 2014, the Company remeasured the derivative liability and recorded a fair value of $0 due to the loan being in default. As a result of the remeasurement, the Company recorded a change in fair value associated with this derivative liability as income totaling $7,238 for the fiscal year ended December 31, 2014.

The Company does not believe that the debt is valid, but has accrued the notes on its financial statements to be conservative. The reason that it does not believe the Blackbridge Agreement to be valid is that the parties agreed at the time that the Blackbridge Agreement was signed that it would take 90-120 days to file an S-1 to register the shares needed for the equity line of credit and that such commitment fee would not be payable until such time. The Blackbridge Agreement states, however, that the Company has only 60 days from the date that the Agreement was signed to file an S-1 to register the shares, which the parties agreed was an impossible requirement to meet. The failure to meet that requirement was an event of default in the Blackbridge Agreement, and the counterparty, which could terminate the Blackbridge Agreement at its sole discretion, did not grant a waiver of this clause, despite knowing that that requirement was unrealistic, particularly given the Company’s thin cash position. The inability to register the shares within the required timeframe guaranteed the default of the Company under the Blackbridge Agreement from the outset. As such, the Company believes that said Agreement is null and void, because it lacked the capacity to perform under the Blackbridge.

In 2014, the Company accrued $2,451 of interest expense associated with this note. As of December 31, 2014, the Note is in default.

f) Convertible Note Payable

On January 7, 2013, effective December 31, 2012, the Company, JV and Vulcan entered an agreement pursuant to which the JV Agreement was terminated, the Company issued to Vulcan a 4% convertible promissory note in the principal amount of $500,000 (the "Forex Note") and Vulcan issued to the Company a 10% Secured and Collateralized Promissory Note in the principal amount of $400,000. The Company recognized a debt discount in the amount of $100,000 for the difference in the face value of the note issued and the note received from the same party. The face value of the note payable is shown net of the debt discount. This debt discount will be amortized over the one-year life of the note. The note has a maturity date of December 31, 2013, and can be extended by the Company for an additional one year at which point the 4% interest rate will increase to 10% per annum. The Forex Note may be prepaid without penalty. The Forex Note conversion price is the Variable Conversion Price, which is defined as 50% multiplied by the average of the lowest three trading prices of the Company's common stock on the OTCBB during the 10-day trading period ending on the latest complete day of trading on the OTCBB prior to the date of conversion. The Variable Conversion Price cannot be less than $0.002 ($10,00 on a post-split basis). At no time will Vulcan convert any amount of the Forex Note into common stock that would result in Vulcan owning more than 4.99% of the common stock outstanding of the Company.

As of December 31, 2013, the entire debt discount has been amortized in the accompanying financial statements, and $20,000 of interest expense was accrued during the year ended December 31, 2013. An additional $43,561 of interest expense was accrued in fiscal year ended December 31, 2014.

In November 14, 2014 the Company and the holder of the Vulcan note entered into settlement agreement terminate any and all agreements between them and to resolve all disputes existing between them, which are the subject of Holder’s draft complaint which has yet to be filed, upon the terms and conditions of which the Company will issue the Holder post-split 1,000,000 shares of common stock (the “Settlement Shares”) at a cost basis of $0.12 per share representing aggregate consideration of $120,000 (the “Settlement Amount”). The stock certificate representing the Settlement Shares shall bear the standard 1933 Act restrictive legend. Holder, at its sole option, at any time prior to June 30, 2015, may convert the Settlement Shares into Series D Preferred Shares with a stated value of $120,000, a conversion price of $0.12 and liquidation and dividend rights to be determined.

Dividends

The Company has not yet adopted any policy regarding payment of dividends.  No dividends have been paid or declared since the Date of Inception.

Critical Accounting Policies and Use of Estimates

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of our consolidated financial statements in accordance with U.S. GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amount of assets and liabilities as of the date of the financial statements, the reported amounts and classification of revenues and expenses during the periods presented, and the disclosure of contingent assets and liabilities. We evaluate our estimates and assumptions on an ongoing basis and material changes in these estimates or assumptions could occur in the future. Changes in estimates are recorded on the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances and at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates if past experience or other assumptions do not turn out to be substantially accurate.

We believe that the accounting policies described below are critical to understanding our business, results of operations, and financial condition because they involve significant judgments and estimates used in the preparation of our consolidated financial statements. An accounting is deemed to be critical if it requires a judgment or accounting estimate to be made based on assumptions about matters that are highly uncertain, and if different estimates that could have been used, or if changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements. Other significant accounting policies, primarily those with lower levels of uncertainty than those discussed below, are also critical to understanding our consolidated financial statements. The notes to our consolidated financial statements contain additional information related to our accounting policies and should be read in conjunction with this discussion.

Presentation and Basis of Financial Statements

The accompanying audited condensed consolidated financial statements include the accounts of Gopher Protocol Inc. and its wholly owned subsidiary, DirectJV Investments, Inc. (together “Gopher” or the Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the useful lives of tangible and intangible assets, depreciation and amortization, allowances for doubtful accounts and loan losses, valuation of common and preferred stock issuances, and the valuation allowance on deferred tax assets. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash equivalents.

Notes and Short-Term Receivable

The notes and short-term receivable are carried at cost, which approximates fair value. The Company measures the impairment of loans based on its historical loan collection experience and existing economic conditions. Impairment is recognized when management believes it is probable that payments will not be received on some portion of the loan, which is determined on an individual loan basis. The Company evaluates loans for impairment on an annual basis or when there are indications that the loan may not be collected. When management determines that a loan is impaired it is placed on non-accrual status, and an allowance for loan losses is established to recognize the estimated amount of impairment. Payments received on non-accrual loans are generally applied to the outstanding principal balance. Loans are removed from non-accrual status when management believes that the borrower will resume making the payments required by the loan agreement.

Property and Equipment

Property and equipment are stated at cost and the related depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Expenditures for repairs and maintenance are charged to operations as incurred. Renewals and betterments are capitalized. Upon the sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized in the results of operations.

Leasehold improvements are amortized over the lesser of the estimated life of the asset or the lease term.

As required by U.S. GAAP for long-lived assets, the Company evaluates the fair value of its property and equipment on an annual basis or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Any impairment of value is recognized when the carrying amount of the asset exceeds its fair value. There were no impairment losses for the fiscal years ended December 31, 2014 and 2013.

Fair value measurements

Financial instruments and certain non-financial assets and liabilities are measured at their fair value as determined based on the assets highest and best use. GAAP has established a framework for measuring fair value that is based on a hierarchy that requires that the valuation technique used be based on the most objective inputs available for measuring a particular asset or liability. There are three broad levels in the fair value hierarchy that describe the degree of objectivity of the inputs used to determine fair value. The fair value hierarchy is set forth below:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. They are based on best information available in the absence of level 1 and 2 inputs.

The carrying value of financial instruments, which include cash and cash equivalents, notes receivable, notes payable, and accrued expenses, approximate their fair values due to the short-term nature of these financial instruments.

Treasury Stock

Treasury stock is recorded at cost. The re-issuance of treasury shares is accounted for on a first in, first-out basis and any difference between the cost of treasury shares and the re-issuance proceeds are charged or credited to additional paid-in capital. During 2011, the Company bought back 8 post-split shares (38,000 pre-split) shares of its own shares. On December 31, 2014, the Company returned 40,000 post-split shares (200,000,000 pre-split shares) to treasury in connection with the dissolution of the licensing agreement with Micrologic.

Income Taxes

The Company accounts for income taxes using the liability method, which provides for an asset and liability approach to accounting for income taxes. Under this method, deferred tax assets and liabilities are recorded for future tax effects of temporary differences between the financial reporting and tax basis of assets and liabilities, and measured using the current tax rates and laws that are expected to be in effect when the underlying assets or liabilities are anticipated to be recovered or settled. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount of tax benefits expected to be realized.

U.S. GAAP requires that, in applying the liability method, the financial statement effects of an uncertain tax position be recognized based on the outcome that is more likely than not to occur. Under this criterion the most likely resolution of an uncertain tax position should be analyzed based on technical merits and on the outcome that would likely be sustained under examination. The Company had no uncertain tax positions as of December 31, 2014, and is current in its tax filings.

The Company's federal income tax returns are no longer subject to examination by the IRS for the years prior to 2010, and the related state income tax returns are no longer subject to examination by state authorities for the years prior to 2010.

Revenue Recognition

The Company recognizes consulting fees when services have been rendered.

Share-Based Compensation

The Company calculates stock-based compensation expense including compensation expense for all share-based payment awards made to employees and directors including employee stock options, stock appreciation rights and restricted stock awards based on their estimated grant date fair values. The value of the portion of the award that is ultimately expected to vest is recognized as an expense on a straight-line basis over any required service period. No such expenses were recognized for the fiscal year ended December 31, 2014 and 2013.

Loss Per Share

Basic loss per share is computed by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted loss per share considers the potential dilution that could occur if securities or other contracts to issue common stock were exercised or could otherwise cause the issuance of common stock, such as options, convertible notes and convertible preferred stock, were exercised or converted into common stock or could otherwise cause the issuance of common stock that then shared in loss. Such potential additional common shares are included in the computation of diluted earnings per share. Diluted loss per share has not been computed for the fiscal year ended December 31, 2014 and 2013 because any potential additional common shares would reduce the reported loss per share and therefore have an antidilutive effect.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 The information required by Item 8 appears at Page F-1, which appears after the signature page to this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On April 25, 2013 (the “Dismissal Date”), the Company advised Rosen, Seymour, Shapss, Martin & Company LLP (the “Former Auditor”) that it was dismissed as the Company’s independent registered public accounting firm.  The decision to dismiss the Former Auditor as the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors on April 25, 2013.  Except for the provision of a “Going Concern” opinion, the reports of the Former Auditor on the Company’s consolidated financial statements for the years ended December 31, 2013 and 2013, and did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope, or accounting principle.

During the years ended December 31, 2013 and 2012, and through the Dismissal Date, the Company has not had any disagreements with the Former Auditor on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the Former Auditor’s satisfaction, would have caused them to make reference thereto in their reports on the Company’s consolidated financial statements for such years.

On April 17, 2013 (the “Engagement Date”), the Company engaged Alan R. Swift, CPA, P.A. (“New Auditor”) as its independent registered public accounting firm for the Company’s fiscal year ended December 31, 2013.  The decision to engage the New Auditor as the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the year covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended.  Based upon that evaluation, our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures were not effective as of the end of the applicable period to ensure that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer as appropriate to allow timely decisions regarding required disclosures.

As a smaller reporting company, without a viable business and revenues, the Company does not have the resources to install a dedicated staff with deep expertise in all facets of SEC disclosure and GAAP compliance. As is the case with many smaller reporting companies, the Company will continue to consult with its external auditors and attorneys as it relates to new accounting principles and changes to SEC disclosure requirements. The Company has found that this approach worked well in the past and believes it to be the most cost effective solution available for the foreseeable future. The Company will conduct a review of existing sign-off and review procedures as well as document control protocols for critical accounting spreadsheets. The Company will also increase management's review of key financial documents and records.

As a small business, the Company does not have the resources to fund sufficient staff to ensure a complete segregation of responsibilities within the accounting function. However, Company management does review, and will increase the review of, financial statements on a monthly basis, and the Company's external auditor conducts reviews on a quarterly basis. These actions, in addition to the improvements identified above, will minimize any risk of a potential material misstatement occurring.

Managements Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations and provide only reasonable assurance, not absolute assurance, with respect to financial statement preparation and presentation. The design of an internal control system reflects resource constraints and the benefits must be considered relative to the costs of implementing and maintaining the system.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014. This assessment was based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, other than the control weakness mentioned above, we believe that as of December 31, 2014 the Company’s internal control over financial reporting was not effective based on those criteria. There is a division of duties problem, caused by the fact that we are thinly staffed. The reason for this thin staffing level is that fact that we do not currently have a viable business with revenues and cash flow to support higher levels of staff.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting during the fiscal years 2014 and 2013 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Not applicable.

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE

Below are the names and certain information regarding our executive officers and directors:

Our directors are elected for a term of one year or until their successors are elected and qualified.

Family Relationships

There are no family relationships among our directors and executive officers. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer.

Involvement in Certain Legal Proceedings

To our knowledge, during the last ten years, none of our directors and executive officers has:

CORPORATE GOVERNANCE

Committees

The Board of Directors does not have a standing nominating committee. Nominations for election to the Board of Directors may be made by the Board of Directors or by any shareholder entitled to vote for the election of directors in accordance with our bylaws and Nevada law. Meetings may be held from time to time to consider matters for which approval of our Board of Directors is desirable or is required by law.

Agreements with Officers and Directors

Effective January 2, 2012, Erik Klinger was appointed by the Company to serve as the Chief Financial Officer and a Director of the Company.  On May 20, 2013, Mr. Klinger also assumed the title of Chief Executive Officer, concurrent with Robert Price’s departure. On October 7, 2014, Andrew Cox was appointed by the Company to serve as the President, Chief Executive Officer, Secretary and Treasurer as well as Chairman of the Board of Directors of the Company. Erik Klinger resigned as an executive officer and director of the Company to pursue other interests. On November 7, 2014, Igwekali Reginald Emmanuel was appointed by the Company to serve as the President, Chief Executive Officer, Secretary and Treasurer as well as Chairman of the Board of Directors of the Company. Andrew Cox resigned as an executive officer and director of the Company to pursue other interests.

There is no understanding or arrangement between Mr. Emmanuel and any other person pursuant to which he was appointed as an executive officer and director. Mr. Emmanuel does not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or an executive officer. Mr. Emmanuel has not had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant, exceeding $120,000. Igwekali Reginald Emmanuel has held the positions of Registered Agent, Soccer Scouting Director and Soccer Academy Manager from 2009 through the present. Previously, Mr. Emmanuel was the Head of Marketing for Vatev Sports Company Grecce/Brazil. Mr. Emmanuel received a degree in Business Administration from Rivers State College Of Arts/Science Port Harcourt.

There are no known agreements with any current directors.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, requires our directors, executive officers and persons who own more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other of our equity securities. During the fiscal year ended December 31, 2014, our Chief Executive Officer and Chief Financial Officer did not file the required reports under Section 16 as he does not own more than 10% of our common stock.

Code of Ethics

We have adopted a Code of Ethics that applies to all officers, directors and employees. The Company will provide to any person without charge a copy of such code of ethics upon written request to the Company at its registered offices.

ITEM 11. EXECUTIVE COMPENSATION

The following tables set forth all compensation paid with respect of our Chief Executive Officer for the years ended December 31, 2014 and 2013.

Summary Compensation Table

The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer.

There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our sole officer and director other than as described herein.

Igwekali Reginald Emmanuel was appointed as CEO, and he received no form of compensation for the years ended December 31, 2014 and 2013, respectively.

Director Compensation

Mr. Klinger’s total compensation was $81,200 over the two-year period from January 1, 2013 to December 31, 2014.

Outstanding Equity Awards at Fiscal Year-End

Other than the above disclosure there are no outstanding equity awards outstanding at December 31, 2014.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table identifies, as of April 15, 2015, the number and percentage of outstanding shares of Common Stock owned by (i) each person known to the Company who owns more than five percent of the outstanding Common Stock, (ii) each named executive officer and director, and (iii) and all executive officers and directors of the Company as a group:

(1) Beneficial ownership is determined in accordance with the Rule 13d-3(d)(1) of the Exchange Act, as amended and generally includes voting or investment power with respect to securities. Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table. The above is based on 1,059,969 shares of common stock outstanding as of April 15, 2015.

(2) Officer and/or director of the Company.

(3) Represents shares of common stock issuable upon conversion of Series D Preferred Stock.

No Director, executive officer, affiliate or any owner of record or beneficial owner of more than 5% of any class of voting securities of the Company is a party adverse to the Company or has a material interest adverse to the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

On April 23, 2012, Robert Morris Price was appointed by the Company to serve as the President, Chief Executive Officer, and Treasurer as well as Chairman of the Company.  Mr. Price has been involved in the private practice of law for the last 50 years and was admitted to the District of Columbia Bar in 1963, to the U.S. Supreme Court in 1967, and to Maryland and U.S. Court of Appeals, Fourth Circuit in 1976. Mr. Price received an AB from the University of South Carolina in 1959 and his law degree from the George Washington University in 1962. On May 20. 2013, Robert Price resigned as CEO of the Company to pursue other opportunities. This decision was not the result of any disagreement with the Company.

On December 20, 2011, effective January 2, 2012, Erik Klinger was appointed by the Company to serve as the Chief Financial Officer and a Director of the Company.   On October 7, 2014, Andrew Cox was appointed by the Company to serve as the President, Chief Executive Officer, Secretary and Treasurer as well as Chairman of the Board of Directors of the Company. Erik Klinger resigned as an executive officer and director of the Company to pursue other interests.

On November 7, 2014, Igwekali Reginald Emmanuel was appointed by the Company to serve as the President, Chief Executive Officer, Secretary and Treasurer as well as Chairman of the Board of Directors of the Company. Andrew Cox resigned as an executive officer and director of the Company to pursue other interests. There is no understanding or arrangement between Mr. Emmanuel and any other person pursuant to which he was appointed as an executive officer and director. Mr. Emmanuel does not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or an executive officer. Mr. Emmanuel has not had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant, exceeding $120,000. Igwekali Reginald Emmanuel has held the positions of Registered Agent, Soccer Scouting Director and Soccer Academy Manager from 2009 through the present. Prior to this, Mr. Emmanuel was the Head of Marketing for Vatev Sports Company Grecce/Brazil. Mr. Emmanuel received a degree in Business Administration from Rivers State College Of Arts/Science Port Harcourt.

Procedures for Approval of Related Party Transactions

Our Board of Directors is charged with reviewing and approving all potential related party transactions.  All such related party transactions must then be reported under applicable SEC rules. We have not adopted other procedures for review, or standards for approval, of such transactions, but instead review them on a case-by-case basis.

Director Independence

Igwekali Reginald Emmanuel was appointed Chief Executive Officer on November 7, 2014 – and serves as the sole director of the Company, and is therefore not considered independent as of the date of this filing.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

On December 28, 2011 (the "Engagement Date"), the Company engaged Rosen, Seymour, Shapss, Martin & Company LLP ("Rosen") as its independent registered public accounting firm for the Company's fiscal year ended December 31, 2011.

On April 25, 2013, the Company advised Rosen that it was dismissed as the Company’s independent registered public accounting firm.  Except for the provision of a “Going Concern” opinion, the reports of the Former Auditor on the Company’s consolidated financial statements for the years ended December 31, 2012 and 2011 did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope, or accounting principle.

On April 17, 2013 (the “Engagement Date”), the Company engaged Alan R. Swift, CPA, P.A. (“New Auditor”) as its independent registered public accounting firm for the Company’s fiscal year ended December 31, 2013.  The decision to engage the New Auditor as the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors.

Audit Fees

For the Company’s fiscal year ended December 31, 2014, we were billed $19,250, and for the year ended December 31, 2013, we were billed approximately $9,620 by our current auditor for professional services rendered for the review of our financial statements.

For the Company’s fiscal year ended December 31, 2012, we paid $94,585 to our former auditor for professional services related to the audit of 2011 year-end and reviews of the quarterly filings. These fees were higher than anticipated, due to additional work related to the restatement of prior year’s financials. In fiscal 2013, we paid $35,171 to Rosen in connection with the audit of fiscal 2012.

Audit Related Fees

There were no fees for audit related services for the years ended December 31, 2014 and 2013.

Tax Fees

We incurred no fees to an accountant for tax advice and tax compliance services during the fiscal years ended December 31, 2014 and 2013, respectively.

All Other Fees

The Company did not incur any other fees related to services rendered by our current and/or former auditor for the years ended December 31, 2014 and 2013.

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.

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

● approved by our audit committee; or

● entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors.

ITEM 15. EXHIBITS

(a) EXHIBITS

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

GOPHER PROTOCOL INC.

f/k/a Forex International Trading Corp.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014 and 2013

TABLE OF CONTENTS

 GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP.

CONSOLIDATED BALANCE SHEETS

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

GOPHER PROTOCOL, IN.C
f/k/a FOREX INTERNATIONAL TRADING CORP.

CONSOLIDATED STATEMENT OF OPERATIONS

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

GOPHER PROTOCOL, INC.
f/k/a FOREX INTERNATIONAL TRADING CORP. 

CONSOLIDATED STATEMENTS OFCHANGES IN STOCKHOLDERS’ (DEFICIENCY) / EQUITY 

YEARS ENDED DECEMBER 31, 2014 and 2013 

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

GOPHER PROTOCOL, INC.
f/k/a FOREX INTERNATIONAL TRADING CORP. 

CONSOLIDATED STATEMENTS OFCASH FLOWS 

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

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

Note 1 - Organization and Nature of Business

Gopher Protocol, Inc., (f/k/a Forex International Trading Corp.) (the "Company", "we", "us", "our" or "Gopher") was incorporated on July 22, 2009, under the laws of the State of Nevada and is headquartered in Perris, California. On September 9, 2009, the Company filed a Form S-1 Registration Statement to provide for the registration of securities under the Securities Act of 1933. Currently and going forward the company is a consumer heuristic technology platform that connects consumers with the products or services they need. In the past it had been principally engaged in offering consulting for foreign currency market trading to non-US resident clients, professionals and retail clients

On May 1, 2014, the Company stock was moved from OTCQB to OTC Pink Sheets due to the new OTCQB $.01 closing bid price requirement. From May1, 2014 to July 18, 2014, the Company stock traded both on OTCBB and on OTC Pink Sheets. On July 18, 2014, the last broker quoting the Company stock on the OTCBB had removed their quote, resulting in the company no longer trading on OTCBB from that date.

On August 13, 2014, the Company filed a definitive Information Statement Pursuant to Section 14 (c) of the Securities Exchange Act of 1934 for the following purposes:

In September of 2014, the Company filed an amended Certificate of Incorporation with the Secretary of State of Nevada to increase the authorized shares to 2,000,000,000 shares. In October of 2014, the Company implemented a 1-5,000 reverse split, with no fractional shares allowed.

In February of 2015, the Company filed Articles of Merger (the “Articles”) with the Secretary of the State of Nevada to effectuate a name change. The Articles were filed to effectuate a merger between Gopher Protocol, Inc., a Nevada corporation and a wholly owned subsidiary of Forex International Trading Corp., with Forex International Trading Corp. being the surviving entity. As a result, the Company’s name changed from “Forex International Trading Corp.” to “Gopher Protocol, Inc.”

Note 2 - Summary of Significant Accounting Policies

Presentation and Basis of Financial Statements

The accompanying consolidated financial statements include the accounts of Gopher Protocol, Inc. (f/k/a Forex International Trading Corp.), and its wholly-owned subsidiary, DirectJV Investments, Inc. (together “Gopher” or the Company”), and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include depreciable lives of property and equipment, valuation of beneficial conversion feature debt discounts, valuation of derivatives, valuation of share-based payments and the valuation allowance on deferred tax assets.

Cash and Cash Equivalents

The Company considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash equivalents.

Notes and Short-Term Receivable

The notes and short-term receivable are carried at cost, which approximates fair value. The Company measures the impairment of loans based on its historical loan collection experience and existing economic conditions. Impairment is recognized when management believes it is probable that payments will not be received on some portion of the loan, which is determined on an individual loan basis. The Company evaluates loans for impairment on an annual basis or when there are indications that the loan may not be collected. When management determines that a loan is impaired it is placed on non-accrual status, and an allowance for loan losses is established to recognize the estimated amount of impairment. Payments received on non-accrual loans are generally applied to the outstanding principal balance. Loans are removed from non-accrual status when management believes that the borrower will resume making the payments required by the loan agreement.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

Property and Equipment

Property and equipment are stated at cost and the related depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Expenditures for repairs and maintenance are charged to operations as incurred. Renewals and betterments are capitalized. Upon the sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized in the results of operations.

Leasehold improvements are amortized over the lesser of the estimated life of the asset or the lease term.

As required by U.S. GAAP for long-lived assets, the Company evaluates the fair value of its property and equipment on an annual basis or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Any impairment of value is recognized when the carrying amount of the asset exceeds its fair value. There were no impairment losses for the fiscal year ended December 31, 2014 and 2013.

Fair value measurements

Financial instruments and certain non-financial assets and liabilities are measured at their fair value as determined based on the assets highest and best use. GAAP has established a framework for measuring fair value that is based on a hierarchy that requires that the valuation technique used be based on the most objective inputs available for measuring a particular asset or liability. There are three broad levels in the fair value hierarchy that describe the degree of objectivity of the inputs used to determine fair value. The fair value hierarchy is set forth below:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. They are based on best information available in the absence of level 1 and 2 inputs.

The carrying value of financial instruments, which include cash and cash equivalents, notes receivable, notes payable, and accrued expenses, approximate their fair values due to the short-term nature of these financial instruments.

Treasury Stock

Treasury stock is recorded at cost. The re-issuance of treasury shares is accounted for on a first in, first-out basis and any difference between the cost of treasury shares and the re-issuance proceeds are charged or credited to additional paid-in capital. During 2011, the Company bought back 8 post-split shares (38,000 pre-split) shares of its own shares. On December 31, 2014, the Company returned 40,000 post-split shares (200,000,000 pre-split shares) to treasury in connection with the dissolution of the licensing agreement with Micrologic.

Income Taxes

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount of tax benefits expected to be realized.

U.S. GAAP requires that, in applying the liability method, the financial statement effects of an uncertain tax position be recognized based on the outcome that is more likely than not to occur. Under this criterion the most likely resolution of an uncertain tax position should be analyzed based on technical merits and on the outcome that would likely be sustained under examination. The Company had no uncertain tax positions as of December 31, 2014.

The Company's federal income tax returns are no longer subject to examination by the IRS for the years prior to 2010, and the related state income tax returns are no longer subject to examination by state authorities for the years prior to 2010.

Revenue Recognition

The Company recognized revenue on arrangements in accordance with FASB Codification Topic 605, “Revenue Recognition” (“ASC Topic 605”). Under ASC Topic 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. We had revenue of $120,000 and $100,000 for the years ended December 31, 2014 and 2013, respectively.

During the year ended December 31, 2014, 100% of the Company’s revenue was related to consulting services provided to one company in the foreign exchange business.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

Share-Based Compensation

In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. The Company applies this statement prospectively. No such expenses were recognized for the fiscal year ended December 31, 2014 and 2013.

Derivative Financial Instruments

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model. 

Earnings (Loss) Per Share

In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” Basic earnings per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. Because of the Company’s net losses, the effects of stock options, convertible notes, and convertible preferred stock would be anti-dilutive and accordingly, is excluded from the computation of earnings per share. Diluted loss per share has not been computed for the fiscal year ended December 31, 2014 and 2013 because any potential additional common shares would reduce the reported loss per share and therefore have an antidilutive effect.

Reclassification

Certain amounts from prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on the Company's net loss or cash flow.

Note 3 - Liquidity and 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. The Company sustained net loss of $295,569 and used cash in operating activities of $63,945 for the year ended December 31, 2014. The Company had a working capital deficit of $455,688, stockholders’ deficit of $452,295 and accumulated deficit of $2,412,030, respectively, at December 31, 2014. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The Company is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from third parties to sustain its current level of operations. The Company is in the process of securing working capital from investors for common stock, convertible notes payable, and/or strategic partnerships. No assurance can be given that the Company will be successful in these efforts.

The consolidated financial statements have been prepared assuming that the Company will continue to function as a going concern, and do not include adjustments that might result from the outcome of this uncertainty. Based on the Company’s operating plan, existing working capital at December 31, 2014 was insufficient to meet cash requirements to support Company operations through December 31, 2015.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

Note 4 - Investments, Acquisitions, and Divestiture

Joint Venture – Vulcan Oil & Gas Inc.

On February 13, 2012, Direct JV Investments Inc. ("JV"), a wholly-owned subsidiary of the Company entered into a Joint Venture Agreement (the "JV Agreement") with Vulcan Oil & Gas Inc. ("Vulcan"), whereby the Company would from time to time provide financing to certain Vulcan alternative, green and solar energy projects (the "Projects") with the goal of sharing in any rebates awarded by the government on any of the Projects. Pursuant to the JV Agreement, JV provided Vulcan with $68,000 in cash (the Funding") and credit for inventory valued at $31,328 for a total investment value of $99,328 (the "Investment").

On January 7, 2013, effective December 31, 2012, the Company, JV and Vulcan entered into an agreement pursuant to which the JV Agreement was terminated. The Company issued to Vulcan a 4% convertible promissory note in the principal amount of $500,000 (the "Forex Note") and Vulcan issued to the Company a 10% Secured and Collateralized Promissory Note in the principal amount of $400,000 (the "Vulcan Note" and collectively with the Forex Note, the "Notes") in consideration of the Forex Note. The Investment of $99,328 was written off as of December 31, 2012. After closing the Notes and recording of the difference as a debt discount, there are no further balances due between the parties and the JV Agreement is null and void.

The Forex Note maturity date is December 31, 2013, and was extended by the Company for an additional one year at which point the 4% interest rate will increase to 10% per annum. The Forex Note is currently in default. The Forex Note conversion price is the Variable Conversion Price, which is defined as 50% multiplied by the average of the lowest three trading prices of the Company's common stock on the OTCBB during the 10-day trading period ending on the latest complete day of trading on the OTCBB prior to the date of conversion. The Variable Conversion Price cannot be less than $0.002. At no time will Vulcan convert any amount of the Forex Note into common stock that would result in Vulcan owning more than 4.9% of the common stock outstanding of the Company.

The Vulcan Note has a 10% one-time interest charge on the principal sum. The interest rate will be increased by an additional 4% per annum (e.g. 14% per annum) in the event the principal is not paid by the December 31, 2014 maturity date.

In November 2014 the Company and the holder of the Vulcan note entered into settlement agreement terminate any and all agreements between them and to resolve all disputes existing between them, which are the subject of Holder’s draft complaint which has yet to be filed, upon the terms and conditions of which the Company will issue the Holder 1,000,000 shares of common stock (the “Settlement Shares”) at a cost basis of $0.12 per share representing aggregate consideration of $120,000 (the “Settlement Amount”). The stock certificate representing the Settlement Shares shall bear the standard 1933 Act restrictive legend. Holder, at its sole option, at any time prior to June 30, 2015, may convert the Settlement Shares into Series D Preferred Shares with a stated value of $120,000, a conversion price of $0.12 and liquidation and dividend rights to be determined. As of December 31, 2014, the note and accrued interest balance was $0.

Note 5 - Notes and Short-term Receivables

At December 31, 2013, the Company had a receivable from Vulcan which had a balance of $440,000, which included $40,000 of accrued interest. In November 2014 the Company and the holder of the Vulcan note entered into settlement agreement terminate any and all agreements between them and to resolve all disputes existing between them, which are the subject of Holder’s draft complaint which has yet to be filed, upon the terms and conditions of which the Company will issue the Holder 1,000,000 shares of common stock (the “Settlement Shares”) at a cost basis of $0.12 per share representing aggregate consideration of $120,000 (the “Settlement Amount”). The stock certificate representing the Settlement Shares shall bear the standard 1933 Act restrictive legend. Holder, at its sole option, at any time prior to June 30, 2015, may convert the Settlement Shares into Series D Preferred Shares with a stated value of $120,000, a conversion price of $0.12 and liquidation and dividend rights to be determined. The Company recognized the expense for the loss associated with the conversion of the note receivable and note payable to Vulcan in the amount of $45,227.

Note 6 - Property and Equipment, Net

Property and equipment consisted of the following as of December 31, 2014 and 2013:

Depreciation expense was $1,641 and $3,383 for the fiscal year ended December 31, 2014 and 2013, respectively.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

Note 7 - Other Assets

Websites development, net

On April 19, 2010, the Company entered into a Software Licensing Agreement whereby the Company licensed proprietary trading software (the “Software”) for the purpose of developing a Forex Trading Platform and introducing prospective clients (“End Users”). In return, the Company received a newly created website, at cost of $105,359. The cost of the website includes the vendor’s normal set-up fee plus payroll costs and consulting fees incurred by the Company relating to the development of internal use software. The total cost of $105,359 cost was capitalized and is being amortized over a two-year life. The asset has been fully amortized as of December 31, 2012.

License agreement

On January 2, 2014, and effective December 31, 2013, the Company and Micrologic Design Automation, Inc. ("MDA") signed a letter agreement whereby MDA provided for a perpetual, royalty free, exclusive license of the Licensed Technology, as defined in the Evaluation License Agreement dated September 1, 2013. In connection with this agreement, the Company agreed to issue 40,000 post-split (200,000,000 pre-split) shares of common stock having a value of $600,000 based upon recent market value ($0.003/shares). On or about January 5, 2015, effective December 31, 2014, the Company and MDA signed cancelation agreement in connection with ELA. MDM returned its stock certificate and the Company returned it to transfer agent for cancelation.

Note 8 – Notes and Convertible Notes Payable

At December 31, 2014 and 2013, notes payable and accrued interest consisted of:

a) Convertible Notes Payable

On October 6, 2009, the Company signed a note payable for $25,000 to Rasel Ltd due on October 6, 2010, bearing interest at 4% per annum. The proceeds were used to pay for half of existing accounts payable for legal fees incurred at the Company’s inception. On October 20, 2009, the Company signed a note payable for $50,000 payable to Rasel due on October 20, 2010, bearing interest at 4% per annum (collectively, the “Rasel Note”). These proceeds were used to pay for startup costs, audit fees and future expenses.

On January 22, 2010, the Company signed a note payable for $50,000 payable to Rasel due on October 30, 2011, bearing interest at 4% per annum. These proceeds were used for working capital and expenditures. On January 22, 2010, the Company signed an amendment to extend the maturity date of the promissory notes in the amount of $25,000 and $50,000 dated October 6, 2009 and October 20, 2009, respectively, to October 30, 2011. On March 2, 2011, the Company and Rasel agreed to extend the maturity of all notes to December 31, 2012, in consideration of adding a conversion feature to the notes with either a 5% discount to the market price or a fixed price of $0.60. The extension of maturity was effective as of December 30, 2010. Approximately 50% of the note and accrued interest balance at December 31, 2013 ($73,813) was paid off in 2014 by Financier 2. The Company has accrued $1,248 of interest expense in 2014 in connection with this note.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

b) Note Payable

On December 31, 2012, the Company converted a payable in the amount of $155,542 to a note payable. The note bears annual interst at 10%, and was to mature on December 31, 2012. The Company has negotiated an extension to the maturity date until December 31, 2013. The note is currently in default: the Company will attempt to reach an amicable settlement with the counterparty. The balance at December 31, 2014 and December 31, 2013, including accrued interest, is $43,464 and $97,552, respectively. The note was reduced for revenue during the fiscal year December 31, 2014 from the note holder. The Company has accrued $4,475 of interest expense in 2014 in connection with this note.

c) Issuance of note payable to third party

On July 24, 2013, the Company entered into a Securities Purchase Agreement with a third party financing source ("Financer 1"), for the issuance of an 8% convertible note in the principal amount of $42,500 (the "July 2013 Note"), of which $2,500 was for legal fees associated with the transaction.  The financing closed on July 31, 2013.

The July 2013 Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on April 29, 2014.  The July 2013 Note is convertible into common stock, at Financer’s option, at the greater of a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion or $0.00009.  In the event the Company prepays the July 2013 Note in full, the Company is required to pay to Financer an amount in cash equal to all principal, interest and any other amounts owing multiplied by (i) 112% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 121% if prepaid 31 days following the closing through 60 days following the closing and (iii) 126% if prepaid 61 days following the closing through 90 days following the closing and (iv) 131% if prepaid 91 days following the closing through 120 days following the closing and (v) 136% if prepaid 121 days following the closing through 150 days following the closing and (vi) 141% if prepaid 151 days following the closing through 180 days following the closing. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.   Financer has agreed to restrict its ability to convert the July 2013 Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 9.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company received from this offering were $42,500, less $2,500 in attorney’s fees. As of the date of the July 2013 Note, the Company is obligated on the Note issued to Financer in connection with the offering. The July 2013 Note is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company.  The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended  (the "Act") for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated there under since, among other  things,  the  transaction  did not involve a public  offering,  Financer is an accredited  investor, Financer had access to information about the Company  and their  investment,  Financer  took the  securities  for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

In April 2014, Financier converted the entire remaining note balance, and released the company from its debt, which is a zero balance. In June of 2014, the Company issued another note to the Financier payable for $32,500 (“June 2014 Note”), of which $2,500 was for legal fees associated with the transaction. The terms of the new note were similar to the terms described above, with a maturity of March 5, 2015.

The June 2014 Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on maturity.  The June 2014 Note is convertible into common stock, at Financer’s option, at the greater of a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion or $0.00001.  In the event the Company prepays the June 2014 Note in full, the Company is required to pay to Financer an amount in cash equal to all principal, interest and any other amounts owing multiplied by (i) 112% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 121% if prepaid 31 days following the closing through 60 days following the closing and (iii) 126% if prepaid 61 days following the closing through 90 days following the closing and (iv) 131% if prepaid 91 days following the closing through 120 days following the closing and (v) 136% if prepaid 121 days following the closing through 150 days following the closing and (vi) 141% if prepaid 151 days following the closing through 180 days following the closing. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.   

Financer has agreed to restrict its ability to convert the June 2014 Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company received from this offering were $32,500, less $2,500 in attorney’s fees pursuant to the terms of this convertible agreement. As of the date of the June 2014 Note, the Company is obligated on the Note issued to Financer in connection with the offering. The June 2014 Note is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. 

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended  (the "Act") for the private placement  of these  securities  pursuant  to  Section  4(2) of the Act  and/or  Regulation  D promulgated  there under since,  among other  things,  the  transaction  did not involve a public  offering,  Financer is an accredited  investor, Financer had access to information about the Company  and their  investment,  Financer  took the  securities  for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

In 2014, the Company accrued $1,734 of interest in connection with the July 2013 Note and the June 2014 Note. As of December 31, 2014, the June 2014 Note is in default.

d) Third Party Note Payable

On May 13, 2014, the Company entered into an agreement with a third party financing source ("Financier 2"), for the issuance of an 8% convertible note in the principal amount of $147,625 (the "May 2014 Note").  In conjunction with the issuance of the May 2014 Note, an existing note holder (Rasel, owner of the Rasel Notes) agreed to have the proceeds of the May 2014 Note used to offset the amounts owed to them as evidenced by the Assignment of Convertible Debenture agreement dated May 12, 2014, between the holders of the Rasel Notes and Financier 2. The Assignment of Convertible Debenture agreement calls for the Financier 2 to make two payments of $73,813 each to the existing note holder (Rasel Notes). On May 13, 2014, the Financier 2 made the first payment to the existing note holder (Rasel Notes), however, Financier 2 defaulted on their obligation to make the second payment per the Assignment of Convertible Debenture agreement. As a result, the Company and Financier 2 have mutually agreed to release Financier 2 from its’ obligation for the second payment, and the other half of the note in the amount of $73,812 reverted back to Rasel.

The May 2014 Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on September 1, 2014.  The May 2014 Note is convertible into common stock, at Financer 2’s option, at the greater of a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion or $0.0001.  

Financer 2 has agreed to restrict its ability to convert the May 2014 Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.   As of the date of the May 2014 Note, the Company is obligated on the Note issued to Financer 2 in connection with the offering. The May 2014 Note is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. 

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended  (the "Act") for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated there under since, among other things, the transaction did not involve a public offering, Financer is an accredited investor, Financer had access to information about the Company and their investment, Financer took the securities  for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

During the fiscal year ended December 31, 2014, Financier 2 converted 64,400 post-split (322,000,000 pre-split) shares at an average valuation of approximately $0.98 on a post-split basis. The Company has accrued $957 in interest expense in 2014 in connection with this note. As of December 31, 2014, the balance of the note including accrued interest is $8,592.

e) Convertible note payable to Blackbridge

On June 16, 2014, the Company entered into a set of agreements (collectively, the “Blackbridge Agreement”) with Blackbridge, a financial services firm. The Company and Blackbridge were discussing an equity line of credit, and the Company agreed to pay Blackbridge a commitment fee of 90,000,000 shares (18,000 shares post-split), and also issued a convertible note for $90,000 having a 5% interest rate that matures on December 16, 2014. The note can be converted after the maturity date. The conversion price is 90% multiplied by the market price, which is defined in the agreement as the lowest of the daily trading price for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion date.

The` Company computed the fair value of the conversion feature at the commitment date, based on the following management assumptions:

The fair value of the embedded conversion option on the commitment date was $7,238. The Company recorded a related debt discount of $7,238, which is amortized over the life of the debt. For the fiscal year ended December 31, 2014, the Company amortized $7,238 of debt discount.

At December 31, 2014, the Company remeasured the derivative liability and recorded a fair value of $0 due to the loan being in default. As a result of the remeasurement, the Company recorded a change in fair value associated with this derivative liability as income totaling $7,238 for the fiscal year ended December 31, 2014.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

The Company does not believe that the debt is valid, but has accrued the notes on its financial statements to be conservative. The reason that it does not believe the Blackbridge Agreement to be valid is that the parties agreed at the time that the Blackbridge Agreement was signed that it would take 90-120 days to file an S-1 to register the shares needed for the equity line of credit and that such commitment fee would not be payable until such time. The Blackbridge Agreement states, however, that the Company has only 60 days from the date that the Agreement was signed to file an S-1 to register the shares, which the parties agreed was an impossible requirement to meet. The failure to meet that requirement was an event of default in the Blackbridge Agreement, and the counterparty, which could terminate the Blackbridge Agreement at its sole discretion, did not grant a waiver of this clause, despite knowing that that requirement was unrealistic, particularly given the Company’s thin cash position. The inability to register the shares within the required timeframe guaranteed the default of the Company under the Blackbridge Agreement from the outset. As such, the Company believes that said Agreement is null and void, because it lacked the capacity to perform under the Blackbridge.

In 2014, the Company accrued $2,451 of interest expense associated with this note. As of December 31, 2014, the Note is in default.

f) Convertible Note Payable

On January 7, 2013, effective December 31, 2012, the Company, JV and Vulcan entered an agreement pursuant to which the JV Agreement was terminated, the Company issued to Vulcan a 4% convertible promissory note in the principal amount of $500,000 (the "Forex Note") and Vulcan issued to the Company a 10% Secured and Collateralized Promissory Note in the principal amount of $400,000. The Company recognized a debt discount in the amount of $100,000 for the difference in the face value of the note issued and the note received from the same party. The face value of the note payable is shown net of the debt discount. This debt discount will be amortized over the one-year life of the note. The note has a maturity date of December 31, 2013, and can be extended by the Company for an additional one year at which point the 4% interest rate will increase to 10% per annum. The Forex Note may be prepaid without penalty. The Forex Note conversion price is the Variable Conversion Price, which is defined as 50% multiplied by the average of the lowest three trading prices of the Company's common stock on the OTCBB during the 10-day trading period ending on the latest complete day of trading on the OTCBB prior to the date of conversion. The Variable Conversion Price cannot be less than $0.002 ($10,00 on a post-split basis). At no time will Vulcan convert any amount of the Forex Note into common stock that would result in Vulcan owning more than 4.99% of the common stock outstanding of the Company.

As of December 31, 2013, the entire debt discount has been amortized in the accompanying financial statements, and $20,000 of interest expense was accrued during the year ended December 31, 2013. An additional $43,561 of interest expense was accrued in fiscal year ended December 31, 2014. The Company is negotiating an offset of the Forex Note against the note receivable from Vulcan as final satisfaction, and will recognize a gain or loss on its financial statements at that time.

On November 14, 2014 the Company and the holder of the Vulcan note entered into settlement agreement terminate any and all agreements between them and to resolve all disputes existing between them, which are the subject of Holder’s draft complaint which has yet to be filed, upon the terms and conditions of which the Company will issue the Holder post-split 1,000,000 shares of common stock (the “Settlement Shares”) at a cost basis of $0.12 per share representing aggregate consideration of $120,000 (the “Settlement Amount”). The stock certificate representing the Settlement Shares shall bear the standard 1933 Act restrictive legend. Holder, at its sole option, at any time prior to June 30, 2015, may convert the Settlement Shares into Series D Preferred Shares with a stated value of $120,000, a conversion price of $0.12 and liquidation and dividend rights to be determined.

Note 9 - Income Taxes

The Company has accumulated net operating losses, which can be used to offset future earnings.  Accordingly, no provision for income taxes is recorded in the consolidated financial statements. A deferred tax asset for the future benefits of net operating losses and other differences is offset by a 100% valuation allowance due to the uncertainty of the Company’s ability to utilize the losses. These net operating losses will expire in the years 2029 through 2033.

The Company had net operating loss carryforwards of $2,106,246 at December 31, 2014. These net operating loss carryforwards may be limited in accordance with Section 382 of the Internal Revenue Code of 1986, as amended, based on certain changes in ownership that have occurred and that could occur in the future. 

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

The tax effects (computed at 40%) of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following:

A reconciliation of income benefit provided at the federal statutory rate of 34% to income tax benefit is as follows:

Note 10 - Stockholders’ Equity

Authorized Shares

Effective April 4, 2014, the Company filed with the State of Nevada a Certificate of Amendment to Articles of Incorporation changing the Company’s number of authorized shares to 600,000,000.

On September 26, 2012, the Company authorized 10,000 Preferred Stock Series C shares, par value $0.00001.

On August 13, 2014, the Company filed a definitive Information Statement Pursuant to Section 14 (c) of the Securities Exchange Act of 1934 for the following purposes:

In September of 2014, the Company filed an amended Certificate of Incorporation with the Secretary of State of Nevada to increase the authorized shares to 2,000,000,000 shares.

In October 3, 2014, the Company implemented a 1-5,000 reverse split, with no fractional shares allowed.

The Company has 2,000,000,000 authorized shares of its $0.00001 par value common stock and 20,000,000 shares of its $0.00001 par value Preferred Stock Series B as of December 31, 2014 and 2013, respectively.

Common Shares:

On September 2, 2013, effective September 1, 2013, the Company entered into an Evaluation License Agreement (the "ELA") with Micrologic Design Automation, Inc. ("MDA"), pursuant to which MDA temporarily licensed to the Company, on a non-exclusive and royalty-free basis, certain technology and related materials for any purpose related to evaluating NanoDRC, NanoRV and NanoLVS technology (the “Technology”).  On January 2, 2014, and effective December 31, 2013, the Company and MDA signed a letter agreement whereby MDA provided for a perpetual, royalty free, exclusive license of the Licensed Technology, as defined in the Evaluation License Agreement dated September 1, 2013, in exchange for 40,000 post split (200 million pre-split) shares of common stock (the “Shares”) of the Company.  MDA is not permitted to sell, assign, hypothecate or transfer the Shares in any way prior to the Company generating at minimum $50,000 in revenue through the use of the Technology (the “Revenue Target”).  A stop transfer legend shall be affixed to the certificate representing the Shares.  If the Revenue Target is achieved, then such stop transfer legend shall be removed.  The shares of common stock were issued under Section 4(2) of the Securities Act of 1933, as amended. On or about January 5, 2015, and effective December 31, 2014, the Company and MDA signed cancelation agreement in connection with ELA. MDM returned its stock certificate and the Company return it to transfer agent for cancelation.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

During the fiscal year ended December 31, 2014, Financier 1 converted $44,200 of its July 2013 Note into 6,399 post split (31,994,477 pre-split) shares of common stock at an average conversion price of $0.0014 per share. In April 2014, Financier converted the entire remaining note balance, and released the company from its debt. On or about June 3, 2014, the Company issued another note to the Financier payable for $32,500 (“September 2014 Note”), of which $2,500 was for legal fees associated with the transaction. The terms of the new note were similar to the terms of prior note.

During the fiscal year ended December 31, 2014, Financier 2 converted $66,178 of its note into 64,400 post-split (322,000,000 pre-split) shares of common stock at an average conversion price of $0.00021 per share.

During the fiscal year ended December 31, 2014 GV Global Communications, Inc converted 7,770 of its Series C Preferred Stock into 12,910 post-split (64,551,667 pre-split) common shares. The Company issued 4,204 additional shares (21,021,900 shares pre-split) to settle calculation differences on conversions.

On or about November 14, 2014 the Company and the holder of the Vulcan note entered into settlement agreement terminate any and all agreements between them and to resolve all disputes existing between them, which are the subject of Holder’s draft complaint which has yet to be filed, upon the terms and conditions of which the Company will issue the Holder 200 post-split shares (1,000,000 pre-split shares) of common stock (the “Settlement Shares”) at a cost basis of $0.12 per share representing aggregate consideration of $120,000 (the “Settlement Amount”). The stock certificate representing the Settlement Shares shall bear the standard 1933 Act restrictive legend. Holder, at its sole option, at any time prior to June 30, 2015, may convert the Settlement Shares into Series D Preferred Shares with a stated value of $120,000, a conversion price of $0.12 and liquidation and dividend rights to be determined.

Treasury Stock

On April 25, 2011, the Company issued a press release announcing that its Board of Directors approved a share repurchase program. Under the program, the Company is authorized to purchase up to 200-post split (1,000,000 pre-split) of its shares of common stock in open market transactions at the discretion of management. All stock repurchases will be subject to the requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended and other rules that govern such purchases. As of December 31, 2013, the Company had repurchased 8-post split shares (38,000 pre-split) shares of its common shares in the open market, which were returned to treasury. On December 31, 2014, the Company returned 40,000 post-split shares (200,000,000 pre-split shares) to treasury in connection with the dissolution of the licensing agreement with Micrologic.

Series B Preferred Shares

On November 1, 2011, the Company and certain creditors entered into a Settlement Agreement (the "Settlement Agreement") whereby without admitting any wrongdoing on either part, the parties settled all previous agreements and resolved any existing disputes. Under the terms of the Settlement Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred Stock of the Company on a pro-rata basis. Following the issuance and delivery of the shares of Series B Preferred Stock to said creditors, as well as surrendering the undelivered shares, the Settlement Agreement resulted in the settlement of all debts, liabilities and obligations between the parties.

The Series B Preferred Stock has a stated value of $100 per share and is convertible into the Company’s common stock at a conversion price of $0.30 per share representing 3,000 posts split (15,000,000 pre-split) common shares. Furthermore, the Series B Preferred Stock votes on an as converted basis and carries standard anti-dilution rights. These rights were subsequently removed, except in cases of stock dividends or splits.

Series C Preferred Shares

On April 29, 2011, GV Global Communications, Inc. (“GV”) provided funding to the Company in the aggregate principal amount of $111,000 (the “Loan”).  On September 25, 2012, the Company and GV entered into a Conversion Agreement pursuant to which the Company agreed to convert the Loan into 10,000 shares of Series C Preferred Stock of the Company, which was approved by the Board of Directors.

Each share of Series C Preferred Stock is convertible, at the option of GV, into such number of shares of common stock of the Company as determined by dividing the Stated Value (as defined below) by the Conversion Price (as defined below).  The Conversion Price for each share is equal to a 50% discount to the average of the lowest three lowest closing bid prices of the Company’s common stock during the 10 day trading period prior to the conversion with a minimum conversion price of $0.002.  The stated value is $11.00 per share (the “Stated Value”).  The Series C Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series C Preferred Stock shall be entitled to one vote for each share of common stock that the Series C Preferred Stock shall be convertible into.   GV has contractually agreed to restrict its ability to convert the Series C Preferred Stock and receive shares of the Company's common stock such that the number of shares of the Company's common stock held by it and its affiliates after such conversion does not exceed 4.9% of the then issued and outstanding shares of the Company's common stock.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

During the fiscal year ended December 31, 2014, GV Global Communications, Inc converted 7,770 of its Series C Preferred Stock into 12,910 post split (64,551,667 common shares pre-split). During the third quarter of 2014, the Company received 4,204 post-split (21,021,900 pre-split) common shares to adjust the shares issued to reflect the amount that both they and the Company believed that they were owed.

The issuance of the Series C Preferred Stock was made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder.  GV is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

Note 11 - Related Parties

Related parties are natural persons or other entities that have the ability, directly or indirectly, to control another party or exercise significant influence over the party in making financial and operating decisions. Related parties include other parties that are subject to common control or that are subject to common significant influences.

Effective January 2, 2012, Erik Klinger was appointed by the Company to serve as the Chief Financial Officer, on a part-time basis, and a Director of the Company. Mr. Klinger earned fees of $32,000 and $49,200, in the nine months ended September 30, 2014 and the fiscal year ended December 31, 2013, respectively. Robert Morris Price was appointed by the Company to serve as the President, Chief Executive Officer, and Treasurer as well as Chairman of the Company in April 2012. On May 20, 2013, Robert Price resigned as CEO of the Company to pursue other opportunities. This decision was not the result of any disagreement with the Company. Erik Klinger became the Chief Executive Officer effective the same day.

On October 7, 2014, Andrew Cox was appointed by the Company to serve as the President, Chief Executive Officer, Secretary and Treasurer as well as Chairman of the Board of Directors of the Company. Erik Klinger resigned as an executive officer and director of the Company to pursue other interests. On November 7, 2014, Igwekali Reginald Emmanuel was appointed by the Company to serve as the President, Chief Executive Officer, Secretary and Treasurer as well as Chairman of the Board of Directors of the Company. Andrew Cox resigned as an executive officer and director of the Company to pursue other interests.

There is no understanding or arrangement between Mr. Emmanuel and any other person pursuant to which he was appointed as an executive officer and director. Mr. Emmanuel does not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or an executive officer. Mr. Emmanuel has not had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant, exceeding $120,000. Igwekali Reginald Emmanuel has held the positions of Registered Agent, Soccer Scouting Director and Soccer Academy Manager from 2009 through the present. Prior to this, Mr. Emmanuel was the Head of Marketing for Vatev Sports Company Grecce/Brazil. Mr. Emmanuel received a degree in Business Administration from Rivers State College Of Arts/Science Port Harcourt.

During the year ended December 31, 2014, the Company paid no rent for the use of prior headquarters in El Segundo or Perris, California, though it did pay minimal fees for office expenses.

Note 12 - Contingencies

Legal Proceedings

From time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business.  There is currently no litigation that management believes will have a material impact on the financial position of the Company.

On June 16, 2014, the Company entered into a set of agreements (collectively, the “Blackbridge Agreement”) with Blackbridge, a financial services firm. The Company and Blackbridge were discussing an equity line of credit, and the Company agreed to pay Blackbridge a commitment fee of 90,000,000 shares (18,000 shares post-split), and also issued a convertible note for $90,000 having a 5% interest rate that matures on December 16, 2014. The note can be converted after the maturity date. The conversion price is 90% multiplied by the market price, which is defined in the agreement as the lowest of the daily trading price for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion date. The Company does not believe that the debt is valid and alleged that Blackbridge designed a contract as a fraud, but has accrued the notes on its financial statements to be conservative. The reason that it does not believe Agreement to be valid is that the parties agreed at the time that the agreement was signed that it would take 90-120 days to file an S-1 to register the shares needed for the equity line of credit. The Agreement states, however, that the Company has only 60 days from the date that the Agreement was signed to file an S-1 to register the shares, which the parties agreed was an impossible requirement to meet. The failure to meet that requirement was an event of default in the Agreement, and the counterparty, which could terminate the Agreement at its sole discretion, did not grant a waiver of this clause, despite knowing that that requirement was unrealistic, particularly given the Company’s thin cash position. The inability to register the shares within the required timeframe guaranteed the default of the Company under the Agreement from the outset. As such, the Company believes that said Agreement is therefore null and void, because the Company lacked the capacity at the outset to perform under the Agreement.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

Note 13 - Per Share Information

Loss per share

Basic loss per share of common stock is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding. Diluted loss per share of common stock (“Diluted EPS”) is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents and convertible securities then outstanding. At December 31, 2014 and 2013, there were 19,689 (98,445,000 pre-split)and 40,410 (202,049,290 pre-split), of potentially dilutive common stock equivalents outstanding, respectively. The potentially dilutive common stock equivalents at December 31, 2014 arise from (i) the issuance on December 7, 2011 of 45,000 Series B Preferred Shares which are convertible into 3,000 (15,000,000 pre-split) common shares, (ii) the issuance of the Rasel note which is convertible into pre-split 5,932 (29,660,000 pre-split) shares, (iii) the issuance of 10,000 Series C Preferred Shares having a stated value of $100 per share, of which 700 (shares remain unconverted, which remaining unconverted shares are convertible into 723 (3,615,000 pre-split) common shares, given recent market prices, and notwithstanding a restriction against owning more than 4.99% of the Company's stock, and (iv) the issuance of a note to a third party Financier, which based on a theoretical conversion at December 31, 2014 would have converted into 2,749 (13,745,000 pre-split) shares of common stock and (iv) the issuance of a note to Blackbridge for their commitment fee, which based on a theoretical conversion at December 31, 2014 would have converted into 7,285 (36,425,000 pre-split) common shares. The potentially dilutive common stock equivalents at December 31, 2013 arise from (i) the issuance on December 7, 2011 of 45,000 Series B Preferred Shares which are convertible into 3,000 (15,000,000 post-split) common shares, (ii) the issuance of the Rasel note which is convertible into 10,034 (50,171,042 pre-split) shares, (iii) the issuance of 10,000 Series C Preferred Shares having a stated value of $100 per share, of which 8,470 shares remain unconverted, which remaining unconverted shares are convertible into 9,317 (46,585,000 pre-split) common shares, given recent market prices, and notwithstanding a restriction against owning more than 4.99% of the Company's stock, and (iv) the issuance of a $500,000 convertible note payable to Vulcan netted against the note receivable from Vulcan, which is convertible into 12,000 (60,000,000 pre-split) shares, given recent market prices, and notwithstanding a restriction against owning more than 4.99% of the Company's stock, and (iv) the issuance of a note to a third party Financier, which based on a theoretical conversion at December 31, 2013 would have converted into 6,059 (30,293,248 pre-split) shares of common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on the net loss per common share.

Note 12 – Concentrations

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments.

The Company places its temporary cash investments with financial institutions insured by the FDIC. No amounts exceeded federally insured limits as of December 31, 2014. There have been no losses in these accounts through December 31, 2014.

Note 13 - Subsequent Events

On January 22, 2015, the Company entered into an Exchange Agreement with Vladimir Kirish pursuant to which Mr. Kirish converted $197,717.22 in debt payable by the Company into post-split 50,000,000 restricted shares of common stock (the "Kirish Shares"). Mr. Kirish acquired the debt from a third party.

On January 22, 2015, the Company entered into an Exchange Agreement with GV Global Communications Inc. ("GV Global") pursuant to which GV Global exchanged $75,273 in debt into a 10% Convertible Debenture in the principal amount of $75,273 (the "GV Note"). The GV Note matures January 21, 2017 (the "Maturity Date") and interest associated with the GV Note is 10% per annum, which is payable on the Maturity Date. The GV Note is convertible into shares of common stock of the Company, at the option of GV Global, at a conversion price of $0.00752734. GV Global has agreed to restrict its ability to convert the GV Note and receive shares of common stock such that the number of shares of common stock held by it in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The GV Note was issued to GV Global in reliance upon exemptions from registration pursuant to Section 3(a)(9) under the Securities Act of 1933. GV Global is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933. In addition, on March 2, 2015, the Company and GV Global Communications, Inc. ("GV") amended that certain 10% Convertible Debenture (the "GV Debenture") which debt underlying the GV Debenture was initially incurred on October 6, 2009 and exchanged for the GV Debenture on January 19, 2014. The parties agreed that the conversion price in the GV Debenture would not be impacted by the 1:1,000 stock split implemented by the Company on February 24, 2015 and will remain $0.0075273.

GOPHER PROTOCOL, INC.

f/k/a FOREX INTERNATIONAL TRADING CORP. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

YEARS ENDED DECEMBER 31, 2014 and 2013 

On January 22, 2015, the Company entered into an Agreement with Fleming PLLC, pursuant to which the Company issued post-split 3,200,000 shares of common stock to Fleming PLLC in consideration of the forgiveness of trade debt payable by the Company in the amount of $32,000. The transaction was subsequently voided an the vendor returned the shares to the Company.

On February 2, 2015, the transfer agent for the Company issued Blackbridge Capital, LLC ("Blackbridge") 4,843,398 shares of common stock (the "Blackbridge Shares") upon Blackbridge submitting a conversion notice converting a Convertible Promissory Note (the "Blackbridge Note") in the principal amount of $90,000 plus interest.

Effective February 17, 2015, the Company filed with the State of Nevada a Certificate of Change to effect a reverse stock split of its outstanding and authorized shares of common stock at a ratio of 1 for 1,000 (the “Reverse Stock Split”). The effective date of the Reverse Stock Split was February 24, 2015.

In February 2015, the Company filed a Certificate of Change (the “Certificate”) with the State of Nevada to decrease the authorized number of shares from 2,000,000,000 to 2,000,000 shares.

In February 24, 2015, the Company implemented a 1-1,000 reverse split, with no fractional shares allowed. In addition, the Company filed Articles of Merger (the "Articles") with the Secretary of State of the State of Nevada to effectuate a name change. The Articles were filed to effectuate a merger between Gopher Protocol Inc., a Nevada corporation and a wholly owned subsidiary of the Company, and the Company, with the Company being the surviving entity. As a result, the Company's name changed from "Forex International Trading Corp." to "Gopher Protocol Inc.". In connection with the above, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority. The Reverse Stock Split was implemented by FINRA on February 23, 2015. Our symbol on the OTCQB will be FXITD for 20 business days from February 23, 2015 (the "Notification Period"). Our new CUSIP number is 38268V 108. As a result of the name change, our symbol been changed following the Notification Period to GOPH.

On March 4, 2015, the Company entered into a Territorial License Agreement (the "License Agreement") with Hermes Roll LLC ("Hermes"), a Nevada limited liability company currently being formed. Pursuant to the License Agreement, Hermes will license to the Company, on an exclusive basis in the State of California, certain intellectual property relating to Hermes's system and method for scheduling categorized deliverables, according to demand, at the customer's location based on smartphone application and/or via the internet, in consideration of 100,000 shares of Series D Preferred Stock of the Company (the "Preferred Shares"). The Preferred Shares have no liquidation rights. The Holder of the Preferred Shares will be entitled to vote on all matters submitted to shareholders of the Company on an as-converted basis. The Preferred Shares have a conversion price of $0.01 (the "Conversion Price") and a stated value of $10.00 per share (the "Stated Value"). Subject to the Company increasing its authorized shares of common stock to 500,000,000, each Preferred Share is convertible, at the option of the Holder, into such number of shares of common stock of the Company as determined by dividing the Stated Value by the Conversion Price. The issuance of the Preferred Shares was made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder. Hermes is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

On January 30, 2015, Financier 1 converted $10,000 of its June 2014 Note into 115 post split (574,713 per split) shares of common stock at an average conversion price of $0.0174 per share. On March 6, 2015, Financier 1 converted $1,170 of its June 2014 Note into 2,996 post the new 1000:1split shares of common stock at an average conversion price of $0.3905 per share.

On March 20, 2015 the Company filed information statement pursuant to section 14 of The Securities Exchange Act Of 1934 and regulations 14C and schedule 14C thereunder, to amend the Company's Certificate of Incorporation, (the “Articles of Incorporation”) to increase the number of authorized shares of common stock, par value $0.00001 per share (the “Common Stock”), of the Company from 2,000,000 shares to 500,000,000 shares.

In April of 2015, a holder of preferred shares exercised their conversion right and converted 1,000 shares of Preferred D Stock into 1,000,000 shares of Common Stock.