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United States 

Securities and Exchange Commission

Washington, D.C. 20549

 

Form 10-Q

  

(Mark One)  
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

  For the quarterly period ended June 30, 2023

 

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

  

Commissions file number: 000-54530

 

GBT TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

  

Nevada 27-0603137
State or other jurisdiction of I.R.S. Employer Identification Number
incorporation or organization  

  

2450 Colorado Ave., Suite 100E, Santa Monica, CA 90404 

(Address of principal executive offices)

  

Issuer ’s telephone number:   888-685-7336

  

Securities registered pursuant to Section 12(b) of the Act: Not applicable.

  

Title of each class Trading Symbol Name of each exchange on which registered
Not applicable.    

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ ☐ No

 

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

  

Large accelerated filer ☐ Accelerated filer ☐  
     
Non-accelerated filer Smaller reporting company Emerging growth company 

  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

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

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

  

Common Stock, $0.00001 par value  6,703,695,062 Common Shares
(Class) (Outstanding at August 15, 2023)

 

 

 

GBT TECHNOLOGIES INC.

 

TABLE OF CONTENTS

  

PART I. Financial Information   Page 
       
Item 1. Condensed Consolidated Financial Statements  
       
  Condensed Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022   2
       
  Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited)   3
       
  Condensed Consolidated Statements of Stockholder’s Deficit for the three and six months Ended June 30, 2023 and 2022 (unaudited)   4
       
  Condensed Consolidated Statements of Cash Flows for the six months Ended June 30, 2023 and 2022 (unaudited)   5
       
  Notes to Condensed Consolidated Financial Statements (unaudited)   6
       
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   35
       
Item 3. Quantitative and Qualitative Disclosures about Market Risk   38
       
Item 4. Controls and Procedures   38
       
PART II. Other Information   40
       
Signatures   48

 

1 

 

 

Item 1: Condensed consolidated financial statements

  

GBT TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

                 
ASSETS   June 30,   December 31,
    2023   2022
    (Unaudited)   (Audited)
Current Assets:                
 Cash   $ 44,068     $ 106,639  
 Accounts Receivable     35,536       25,244  
 Inventory     12,860       11,569  
Prepaid     52,000       12,500  
 Note receivable     197,216       198,475  
Other Current Assets     452        
 Marketable securities     12,506       16,198  
 Total current assets     354,638       370,625  
                 
 Total assets   $ 354,638     $ 370,625  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
                 
Current Liabilities:                
 Accounts payable and accrued expenses   $ 5,789,679     $ 6,240,634  
 Accrued settlement     4,090,057       4,090,057  
 Unearned revenue           48,921  
 Contract liabilities     36,444       41,444  
 Convertible notes payable, current, net     5,964,806       6,397,727  
 Convertible notes payable, related party, net     708,395       116,605  
 Notes payable, current, net     122,093       41,137  
 Notes payable, related party     140,000       140,000  
 Due to related party     91,332       62,003  
 Derivative liability     14,109,864       1,714,143  
 Total current liabilities     31,052,670       18,892,671  
                 
Non-Current Liabilities:                
 Convertible note payable, noncurrent, net     7,415        
 Note payable, noncurrent, net     303,333       308,863  
 Total noncurrent liabilities     310,748       308,863  
                 
 Total liabilities     31,363,418       19,201,534  
                 
Stockholders’ Deficit:                
 Series B Preferred stock, $0.00001 par value; 20,000,000 shares authorized;                
 45,000 and 45,000 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively            
 Series C Preferred stock, $0.00001 par value; 10,000 shares authorized;                
 700 and 700 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively            
 Series D Preferred stock, $0.00001 par value; 100,000 shares authorized;                
 0 and 0 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively            
 Series G Preferred stock, $0.00001 par value; 2,000,000 shares authorized;                
 0 and 0 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively            
 Series H Preferred stock, $0.00001 par value ($500.00 stated value); 40,000 shares authorized;                
 20,000 and 20,000 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively            
Common stock, $0.00001 par value; 2,000,000,000 shares

authorized; 1,535,593,440 and 33,200,198 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

    55,508       15,356  
 Treasury stock, at cost; 21 shares at June 30, 2023 and December 31, 2022, respectively     (643,059 )     (643,059 )
 Stock loan receivable     (7,610,147 )     (7,610,147 )
 Additional paid in capital     291,992,310       288,664,858  
 Accumulated deficit     (314,847,007 )     (299,257,917 )
 Total stockholders’ deficit     (31,052,395 )     (18,830,909 )
Non-Controlling Interest     43,614        
 Total stockholders’ deficit attributable to GBT Technologies, Inc.     (31,008,781 )     (18,830,909 )
 Total liabilities and stockholders’ deficit   $ 354,638     $ 370,625  

 

The accompanying footnotes are an integral part of the unaudited condensed consolidated financial statements.
 

2 

 

 

GBT TECHNOLOGIES INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

  

                                 
    Three Months Ended June 30,   Six months ended June 30,
    2023   2022   2023   2022
Sales   $ 131,419     $ 344,981     $ 349,204     $ 569,951  
Sales - related party                       45,000  
Total sales     131,419       344,981       349,204       614,951  
Cost of goods sold     148,827       179,471       324,918       388,458  
Gross profit     (17,408 )     165,510       24,286       226,493  
                                 
Operating expenses:                                
 General and administrative expenses     133,533       241,869       282,934       371,252  
 Marketing expenses     57,099       92,168       111,997       433,300  
 Professional expenses     143,869       592,305       437,799       1,128,192  
 Total operating expenses     334,501       926,342       832,730       1,932,744  
                                 
Loss from operations     (351,909 )     (760,832 )     (808,444 )     (1,706,251 )
                                 
Other income (expense):                                
 Amortization of debt discount     (120,797 )     (239,394 )     (268,423 )     (307,879 )
 Change in fair value of derivative liability     (9,104,239 )     (2,088,840 )     (13,028,486 )     3,150,739  
 Interest expense and financing costs     (359,290 )     (233,900 )     (1,954,940 )     (469,393 )
Other expense     6,031                    
Gain on debt extinguishment                 315,297        
Gain on bad debt           50,000             50,000  
 Change in fair value of marketable securities     4,855       (175,000 )     (3,692 )     (240,000 )
 Other income - related party licensing income     9,586       6,828       203,212       7,886  
 Total other income (expense)     (9,563,854 )     (2,680,306 )     (14,737,032 )     2,191,353  
                                 
Income (loss) before income taxes     (9,915,763 )     (3,441,138 )     (15,545,476 )     485,102  
                                 
Income tax expense                        
                                 
Loss from continuing operations     (9,915,763 )     (3,441,138 )     (15,545,476 )     485,102  
                                 
Net income (loss)   $ (9,915,763 )   $ (3,441,138 )   $ (15,545,476 )   $ 485,102  
                                 
Less: net loss attributable to the noncontrolling interest     (6,741 )           43,614        
                                 
Net loss attributable to GTB Technologies Inc.     (9,909,022 )     (3,441,138 )     (15,589,090 )     485,102  
                                 
Weighted average common shares outstanding:                                
Basic     5,161,471,785       354,196,118       3,392,096,025       354,381,392  
Diluted     28,485,320,260       4,526,076,373       26,715,944,500       4,526,261,647  
Net loss per share (basic and diluted):                                
Basic   $ (0.00 )   $ (0.01 )   $ (0.00 )   $ 0.00  
Diluted     (0.00 )     (0.00 )     (0.00 )     0.00  

 

The accompanying footnotes are an integral part of the unaudited condensed consolidated financial statements.

3 

 

GBT TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
(unaudited)

 

                                                                         
                    Stock   Additional           Total
    Common Stock   Treasury Stock   Loan   Paid-in   Accumulated   Noncontrolling   Stockholders’
    Shares   Amount   Shares   Amount   Receivable   Capital   Deficit   Interest   Deficit
                                     
Balance, December 31, 2022     1,535,593,440     $ 15,356     $ 1,040     $ (643,059 )   $ (7,610,147 )   $ 288,664,858     $ (299,257,917 )         $ (18,830,909 )
                                                                         
Common stock issued for conversions     1,294,508,379       12,945                         390,603                   403,548  
Fair value of derivative liability due to conversions                                   316,223                   316,223  
Common stock issued for Service     100,000,000       1,000                         79,000                   80,000  
Net loss                                         (5,680,068 )     50,355       (5,629,713 )
                                                                         
Balance, March 31, 2023     2,930,101,819     $ 29,301     $ 1,040     $ (643,059 )   $ (7,610,147 )   $ 289,450,684     $ (304,937,985 )     50,355     $ (23,660,851 )
                                                                         
Common stock issued for conversions     2,620,652,067       26,207                         855,165                   881,372  
Fair value of derivative liability due to conversions                                   1,686,461                   1,686,461  
Net loss                                         (9,909,022 )     (6,741 )     (9,915,763 )
                                                                         
Balance, June 30, 2023     5,550,753,886     $ 55,508     $ 1,040     $ (643,059 )   $ (7,610,147 )   $ 291,992,310     $ (314,847,007 )     43,614     $ (31,008,781 )

 

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

 

Balance, December 31, 2021     33,200,198     $ 332.00     $ 1,040     $ (643,059 )   $ (7,610,147 )   $ 284,072,666     $ (304,581,773 )         $ (28,761,981 )
                                                                         
Common stock issued for conversion of convertible debt and accrued interest     369,198       3,692                         34,996                   35,000  
Fair value of beneficial conversion feature of converted                                   49,504                   49,504  
Common stock issued for cash     463,303       4.000                         68,304                   68,308  
Net loss                                         3,926,239             3,926,239  
                                                                         
Balance, March 31, 2022     34,032,699     $ 340     $ 1,040     $ (643,059 )   $ (7,610,147 )   $ 284,225,470     $ (300,655,534 )         $ (24,682,930 )
                                                                         
Common stock issued for conversions     288,672,073       2,887                         1,663,973                   1,666,860  
Fair value of derivative liability due to conversions                                   1,571,238                   1,571,238  
Common stock issued for cash     5,036,697       51                         163,508                   163,559  
Common stock issued for JV - Tokenize     150,000,000       1,500                         (1,500 )                  
Equity Method Investment - Meta     500,000,000       5,000                         (5,000 )                  
Net loss                                         (3,441,137 )           (3,441,137 )
                                                                         
Balance, June 30, 2022     977,741,469     $ 9,777     $ 1,040     $ (643,059 )   $ (7,610,147 )   $ 287,617,690     $ (304,096,671 )         $ (24,722,410 )

  

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

 

4 

 

 

GBT TECHNOLOGIES INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

  

                 
    For the six months Ended June 30,
    2023   2022
Cash Flows From Operating Activities:                
 Net loss   $ (15,545,476 )   $ 485,102  
 Adjustments to reconcile net loss to net cash used in operating activities:                
 Amortization of debt discount     268,423       307,879  
 Change in fair value of derivative liability     13,028,486       (3,150,739 )
 Excess of debt discount and financing costs     1,528,816        
 Shares issued for services     80,000        
 Change in fair value of market equity security     3,692       240,000  
Gain on debt extinguishment     (315,297 )      
                 
 Changes in operating assets and liabilities:                
 Account receivable     (10,292 )      
Other receivable     1,259       3,747,836  
Prepaid     (39,500 )      
Other assets     (452 )      
Inventory     (1,291 )     (60,925 )
Unearned revenue     (48,921 )     (225 )
Contract liabilities     (5,000 )     (3,556 )
Accounts payable and accrued expenses     838,357       (1,330,044 )
Net cash (used in) provided by operating activities     (217,196 )     235,328  
                 
Cash Flows From Investing Activities:                
 Investment to GTX           (150,000 )
 Investment to TGHI           (125,000 )
Net cash used in investing activities           (275,000 )
                 
Cash Flows From Financing Activities:                
 Issuance of convertible notes     92,150       200,000  
 Issuance of note receivable           (100,000 )
 Proceeds from sales of common stock           231,865  
 Repayments to related party     (549,564 )     (558,379 )
Repayment of Convertible note     (59,004 )      
 Proceeds from related party     578,893       575,516  
 Issuance of notes payable     92,150          
Net cash provided by financing activities     154,625       349,002  
                 
Net increase in cash     (62,571 )     309,330  
                 
Cash, beginning of period     106,639       155,106  
                 
Cash, end of period   $ 44,068     $ 464,436  
                 
Cash paid for:                
 Interest   $     $ 2,898  
 Income taxes   $     $  
                 
Supplemental non-cash investing and financing activities                
Debt discount related to convertible debt   $ 63,379     $ 191,741  
Reduction in derivative liability due to conversion   $ 2,002,684     $ 1,620,742  
Shares issued for conversion of convertible debt   $ 1,284,920     $ 1,701,864  
Share issuance for JV Metaverse   $     $ 5,000  
Share issuance for JV Tokenize   $     $ 1,500  

  

 The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

 

5 

 

 

GBT Technologies, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2023 and 2022 (Unaudited)

 

Note 1 - Organization and Basis of Presentation

 

Organization and Line of Business

 

GBT Technologies Inc. (the “Company”, “GBT”, or “GTCH”) was incorporated on July 22, 2009 under the laws of the State of Nevada. The Company is targeting growing markets such as development of Internet of Things (IoT) and Artificial Intelligence (AI) enabled networking and tracking technologies, including wireless mesh network technology platform and fixed solutions, development of an intelligent human body vitals device, asset-tracking IoT, and wireless mesh networks. Effective August 5, 2019, the Company changed its name from Gopher Protocol Inc. to GBT Technologies Inc. The Company derived revenues from (i) the provision of IT consulting services; and (ii) from the licensing of its technology. (ii) from selling electronic products through e-commerce platforms.

 

On February 18, 2022 the Company, effective March 1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company shares revenues generated by Mahaser with respect to e-commerce sales through the online retail platform in the United States of America.

 

On July 20, 2023, the Company through its wholly owned subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize Corp (“GBT Tokenize”). GBT Tokenize has developed a vital device based on the Technology Portfolio that is ready for commercialization, as well as certain derivative technologies, which positioned GBT Tokenize to further develop or license certain code sources. On April 3, 2023, GBT Tokenize entered its first commercial transaction to date through the sale of the Avant-AI! technology that been developed by GBT Tokenize, based on the Technology Portfolio.

 

The unaudited condensed financial statements (“CFS”) are prepared by the Company, pursuant to the rules and regulations of the SEC. The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented.

 

Basis of Presentation

 

The accompanying CFS were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Stock Split

 

On October 26, 2021, the Company effectuated a 1 for 50 reverse stock split. The share and per share information has been retroactively restated to reflect this reverse stock split.

 

In July 2, 2022 the Company filed a preliminary information statement to the stockholders of record (the “Record Date”) in connection with certain actions to be taken by the written consent by stockholders holding a majority of the voting stock of the Company, dated as of June 28, 2022.

  

  To amend the Company’s Articles 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 2,000,000,000 shares to 10,000,000,000 shares. This action concluded on August 11, 2022:
     
    (i) authorize the Company’s Board of Directors to effect, in its sole discretion, a reverse stock split of the Common Stock in a ratio of up to 1-for-500 (the “Reverse Stock Split”), and (ii) authorize the filing of an amendment to the Company’s Articles of Incorporation to implement the Reverse Stock Split and any other action deemed necessary to effectuate the Reverse Stock Split, without further approval or authorization of stockholders, at any time prior to December 31, 2023. This action was not commenced by the Company’s board.

 

6 

 

 

Note 2 – Going Concern

 

The accompanying CFS have been prepared assuming the Company will continue as a going concern. The Company has an accumulated deficit of $314,847,007 and has a working capital deficit of $30,698,032 as of June 30, 2023, which raises substantial doubt about its ability to continue as a going concern.

 

The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through some private placement offerings of debt and equity securities. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These CFS do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

 

Note 3 – Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of CFS in conformity with U.S. GAAP 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 CFS and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying CFS include valuation of derivatives and valuation allowance on deferred tax assets.

 

Principles of Consolidation

 

The accompanying CFS include the accounts of the Company and its subsidiaries; the Company’s 50% owned subsidiaries GBT Tokenize Corp. (active) and GBT BitSpeed Corp (currently inactive); the Company’s 50% owned subsidiary, Gopher Protocol Costa Rica Sociedad De Responsabilidad Limitada (currently inactive), a wholly owned subsidiary, AltCorp Trading LLC, a Costa Rica company (“AltCorp” currently inactive) and Greenwich International Holdings, a Costa Rica corporation (“Greenwich” currently inactive). All significant intercompany transactions and balances were eliminated.

 

For entities determined to be VIEs, an evaluation is required to determine whether the Company is the primary beneficiary. The Company evaluates its economic interests in the entity specifically determining if the Company has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance (“the power”) and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (“the benefits”). When making the determination whether the benefits received from an entity are significant, the Company considers the total economics of the entity, and analyzes whether the Company’s share of the economics is significant. The Company utilizes qualitative factors, and, where applicable, quantitative factors, while performing the analysis.

 

In addition, the Company’s variable interests in Mahaser obligate the Company to absorb deficits and provide it with the right to receive benefits that could potentially be significant to Mahaser. As a result of this analysis, the Company concluded it is the primary beneficiary of Mahaser and therefore consolidates the balance sheets, results of operations and cash flows of Mahaser. The Company performs a qualitative assessment of Mahaser on an ongoing basis to determine if it continues to be the primary beneficiary.

 

7 

 

 

Cash Equivalents

 

For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly-liquid debt instruments with original maturities of three months or less. As of June 30, 2023 and December 31, 2022, the Company did not have any cash equivalents.

 

Marketable Securities

 

The Company accounts for investment securities in accordance with ASC Topic 321, Investments – equity securities. Marketable equity securities are reported at FV based on quotations available on securities exchanges with any unrealized gain or loss being reported as a component of other income (expense) on the statement of operations. The portion of marketable equity security expected to be sold within 12 months of the balance sheet date is reported as a current asset. These publicly traded equity securities are valued using quoted prices and are included in Level 1.

 

Inventory

 

Inventory consists of electronic product ready for sale online on e-commerce platforms. It is stated at the lower of cost or net realizable value and all inventories were returned product from online customers. We value our inventory using the weighted average costing method. Our Company’s policy is to include as a part of inventory any freight incurred to ship the product from our contract vendors to our warehouses. Outbound freight costs to our customers are considered period costs and reflected in selling, general and administrative expenses. We regularly review inventory and consider forecasts of future demand, market conditions and product obsolescence.

 

Derivative Financial Instruments

 

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its FV and is then re-valued at each reporting date, with changes in the FV reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of June 30, 2023 and December 31, 2022, the Company’s only derivative financial instrument was an embedded conversion feature associated with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage of the Company’s stock price at the date of conversion.

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their FV due to their short maturities.

 

FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the FV of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines FV, and establishes a three-level valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

8 

 

 

  Level 1 inputs to the valuation methodology are quoted prices 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, quoted prices for identical or similar assets in inactive 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 use one or more unobservable inputs which are significant to the FV measurement.

  

The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.

 

For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as a financial instrument, and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

 

The Company uses Level 2 inputs for its valuation methodology for derivative liabilities as their FV were determined by using the Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect FV at each period end, with any increase or decrease in the FV being recorded in results of operations as adjustments to FV of derivatives.

 

At June 30, 2023 and December 31, 2022, the Company identified the following liabilities that are required to be presented on the balance sheet at FV:

  

               
Description   Fair Value
As of
June 30, 2023
  Fair Value Measurements at
June 30, 2023
Using Fair Value Hierarchy
        Level 1   Level 2   Level 3
Conversion feature on convertible notes   $ 14,109,864     $     $ 14,109,864     $  

 

Description   Fair Value
As of
December 31, 2022
  Fair Value Measurements at
December 31, 2022
Using Fair Value Hierarchy
        Level 1   Level 2   Level 3
Conversion feature on convertible notes   $ 1,714,143     $     $ 1,714,143     $  

  

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.

 

Revenue Recognition

 

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on January 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. The Company had no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying CFS for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.

 

9 

 

 

Revenue from providing IT consulting services are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements:

  

  executed contracts with the Company’s customers that it believes are legally enforceable;
     
  identification of performance obligations in the respective contract;
     
  determination of the transaction price for each performance obligation in the respective contract;
     
  allocation the transaction price to each performance obligation; and
     
  recognition of revenue only when the Company satisfies each performance obligation.

 

These five elements, as applied to each of the Company’s IT revenue category, is summarized below:

  

  IT consulting services - revenue is recorded on a monthly basis as services are provided.

  

These five elements, as applied to each of the Company’s license revenue category, is summarize below:

  

  License services – the one-time related party licensing income recorded as other income upon agreement is executed and services are provided and recognized over the term of five years.

  

E-Commerce sales

  

  Identify the contract(s) with a customer. ASC 606 defines a contract as “an agreement between two or more parties that creates enforceable rights and obligations”. Since this is an e-commerce sale on the Amazon of eBay websites, the Company just followed the general terms on Amazon or eBay websites and the customer entered into a contract with the Company based on the product listed on the Amazon or eBay websites;

  

Identify the performance obligations in the contract. According to the contract, the Company is responsible for operation exclusively. The Company is entitled to all revenue which is being paid by Amazon or eBay into a designated bank account and the Company is responsible for all product acquisitions as well as shipments. The only performance obligations were the electronic products that were listed on Amazon or eBay websites and the Company determined each order is one single obligation;

 

Determine the transaction price. The transaction price set to be the listed price on the Amazon or eBay websites.;

 

Allocation the transaction price to the performance obligations in the contract.; and

 

Recognize revenue when the Company satisfies a performance obligation. Sales are being recognized upon shipment.

 

Unearned revenue

 

Unearned revenue represents the net amount received for the purchase of products that have not seen shipped to the Company’s customers. The Company has $0 and $48,921 of unearned revenue at June 30, 2023 and December 31, 2022, respectively.

 

Contract liabilities

 

10 

 

 

On February 22, 2022, the Company entered into an Intellectual Property License and Royalty Agreement with Touchpoint Group Holdings, Inc. (“Touchpoint” or “TGHI”) pursuant to which the Company granted TGHI a worldwide license for its technologies for five years in the domains of Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies pertaining to the Company’s digital currency technology (the “Technology”). GBT will charge TGHI royalties based on actual uses by TGHI of the Technology resulting from revenue attributable to the use, performance or other exploitation of the Technology, to the extent applicable, after deducting any taxes that the Company may be required to collect, and deducting any international sales, goods and services, value added taxes or similar taxes which the Company is required to pay, if any, excluding deductions for taxes on the Company net income. TGHI agreed to issue the Company 10,000,000 shares of common stock of TGHI in the FV of $50,000 as a onetime fee for the Company entering this Intellectual Property License and Royalty Agreement, which was booked contract liabilities and amortized over the five-year term. The Company has yet to earn any royalty income in relation to this agreement as of June 30, 2023. The contract liabilities as of June 30, 2023 and December 31, 2022 was $36,444 and $41,444, respectively.

 

Variable Interest Entity

 

On February 18, 2022, the Company, effective March 1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company shares in revenues generated by Mahaser e-commerce sales through the online retail platform in the United States of America. Mahaser owns an e-commerce platform as a store which is the legal, exclusive owner of Ravenholm Electronics. The Company will operate the e-commerce platform and entitled to 95% for all revenue generated by and received by Mahaser from March 1, 2022 through December 31, 2022. The RSA provides that the Company will be entitled to appoint a manager to Mahaser. As consideration, the Company will pay Mahaser $100,000 no later than March 1, 2022 and issue Mahaser 1,000,000 shares of the Company’s restricted common stock. The Company shall have no obligations to make any further payments to Mahaser. For any further extensions, the Company will have the option to extend the RSA for annual payment of $200,000, which can be payable with the Company’s shares of common stock payable based on 20 days VWAP prior to issuance. On March 16, 2022 the parties entered into Amendment No. 1 to the to the RSA, where all consideration to be paid or issued to Mahaser will be deferred until such time where the e-commerce platform generated in cumulative revenue of $1,000,000.

 

On March 31, 2022, the parties entered into Amendment No. 2 to the RSA, where Mahaser agreed to pay the Company 100% per year for all revenue generated by and received by seller from the sales by Amazon within the United States of America as follows from March 1, 2022 through December 31, 2022. The Company will be responsible for 100% of the cost of goods sold as well. In addition, the Company is entitled to earn 100% revenues and cost of goods sold of the period from February 1, 2022 to February 28, 2022. On January 1, 2023 the company extended their partnership to December 31, 2023.

 

The Company evaluated whether it has a variable interest in Mahaser, whether Mahaser is a VIE and whether the Company has a controlling financial interest in Mahaser. The Company concluded that it has variable interests in Mahaser on the basis of GBT has 100% control over the JV/revenue sharing, and as such should consolidate the JV into its books and records as it assigned 100% financial responsibility. Mahaser’s equity at risk, as defined by GAAP, is considered to be insufficient to finance its activities without additional support, and, therefore, Mahaser is considered a VIE.

 

The following table summarizes the carrying amount of the assets and liabilities of Mahaser included in the Company’s consolidated balance sheets at June 30, 2023 and as December 31, 2022 (after elimination of intercompany transactions and balances):

  

11 

 

 

       
Assets of consolidated variable interest entity (“VIE”) included in the consolidated balance sheets as of June 30, 2023 (after elimination of intercompany transactions and balances) consist of:    
Current assets:        
Cash and equivalents   $ 41,077  
 Accounts Receivable     35,536  
Inventory     12,860  
Other current asset     452  
Total current assets   $ 89,925  
         
Liabilities of consolidated VIE included in the consolidated balance sheets above (after elimination of intercompany transactions and balances) consist of:        
Current liabilities        
Total current liabilities   $ 169,279  
         
Statements of operations of consolidated VIE included in the consolidated statements of operations above (after elimination of intercompany transactions and balances) consist of:        
Statements of operations        
 Sales   $ 349,204  
 Cost of goods sold     324,918  
 Gross profit     (24,286 )
 General and administrative expenses     62,671  
Net Income   $ (38,385 )

  

         
Assets of consolidated variable interest entity (“VIE”) included in the consolidated balance sheets as of December 31, 2022 (after elimination of intercompany transactions and balances) consist of:    
Current assets:        
Cash and equivalents   $ 93,581  
Inventory     11,569  
Due From related party     20,270  
Total current assets   $ 125,420  
         
Liabilities of consolidated VIE included in the consolidated balance sheets above (after elimination of intercompany transactions and balances) consist of:        
Current liabilities        
Total current liabilities   $ 94,496  
         
Statements of operations of consolidated VIE included in the consolidated statements of operations above (after elimination of intercompany transactions and balances) consist of:        
Statements of operations        
 Sales   $ 1,107,555  
 Cost of goods sold     817,754  
 Gross profit     289,801  
 General and administrative expenses     330,647  
Net Loss   $ 40,846  

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

12 

 

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented and its current on all its tax filings federal and state until 2021 inclusive.

 

Basic and Diluted Earnings Per Share

 

Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Due to the net income incurred potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented. The following potentially-dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.

  

               
    June 30*),   December 31,
    2023   2022
Series B preferred stock     45,000       45,000  
Series C preferred stock     700       700  
Series H preferred stock     20,000       20,000  
Warrants     70,770       70,770  
Convertible notes     79,744,214,039       3,949,223,831  
Total     79,744,350,509       3,949,360,301  

  

Not including 1,000 Serie I Preferred that been issued on July 20, 2023

 

Management’s Evaluation of Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date of June 30, 2023, through the date which the CFS are issued. Based upon the review, other than described in Note 18 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the CFS.

 

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU 2020-06Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company adopted this ASU on the CFS in the year ended December 31, 2021. The adoption had no material impact on the CFS for the period ended March 31, 2023.

 

13 

 

 

On April 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”) to clarify the accounting by issuers for modifications or exchanges of equity-classified warrants. The new ASU is available here and effective for all entities in fiscal years starting after December 15, 2021. Early adoption is permitted. The Company adopted this ASU on the CFS in the year ended December 31, 2021. The adoption had no material impact on the CFS for the period ended March 31, 2023.

 

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying CFS. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

 

Note 3 – Cash, Restricted Cash, and Cash held in Trust

 

Cash consist of amounts held as bank deposits, amounts held in escrow and highly liquid debt instruments purchased with an original maturity of three months or less.

 

From time to time, we may maintain bank balances in interest bearing accounts in excess of the $250,000 currently insured by the Federal Deposit Insurance Corporation for interest bearing accounts (there is currently no insurance limit for deposits in noninterest bearing accounts). We have not experienced any losses with respect to cash. Management believes our Company is not exposed to any significant credit risk with respect to its cash.

 

Note 4 – Marketable Securities

 

TGHI Agreement

 

On January 28, 2022, the Company entered into a Stock Purchase Agreement with Marko Radisic (the “Seller”) and Touchpoint Group Holdings, Inc. (“TGHI”) pursuant to which the Company acquired 10,000 shares of Series A Convertible Preferred Stock (the “Touchpoint Preferred”) from the Seller for $125,000. The Touchpoint Preferred is convertible into 10,000,000 shares of common stock of Touchpoint. On February 22, 2022, the Company entered into an Intellectual Property License and Royalty Agreement with TGHI pursuant to which the Company granted TGHI a worldwide license for its technologies for five years in the domains of Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies pertaining to the Company’s digital currency technology (the “Technology”). GBT will charge TGHI earned royalties based on actual uses by TGHI of the Technology resulting from revenue attributable to the use, performance or other exploitation of the Technology, to the extent applicable, after deducting any taxes that the Company may be required to collect, and deducting any international sales, goods and services, value added taxes or similar taxes which the Company is required to pay, if any, excluding deductions for taxes on the Company net income. TGHI agreed to issue the Company 10,000,000 shares of common stock of TGHI in the FV of $50,000 as a one-time fee for the Company entering this Intellectual Property License and Royalty Agreement, which was booked contract liabilities and amortized over the five-year term. The Company has yet to earn any royalty income under this agreement as of June 30, 2023.

 

TGHI converted the Touchpoint Preferred into 10,000,000 shares of common stock of Touchpoint on February 23, 2022 resulting in the Company owning 20,000,000 shares of common stock of Touchpoint in total FV of $2,000 as of June 30, 2023 based on level 1 stock price in OTC markets.

 

MetAlert (prior name GTX Corp)

 

14 

 

 

On April 12, 2022, GBT Tokenize Corp (“GBT Tokenize”), a Nevada corporation which the Company owns 50% of the outstanding shares of common stock, entered into a series of agreements with GTX Corp (“GTX”) and various note holders of GTX pursuant to which Tokenize acquired a convertible promissory note of GTX of $100,000 (the “GTX Notes”). In addition, GBT Tokenize acquired 76,923 (GBT acquired 5,000,000 in the original deal, where GTX to perform a corporate action of 1:65 reverse split on September 20, 2022) shares of common stock of GTX for $150,000 - in total FV of $8,846 as of June 30, 2023 based on level 1 stock price in OTC markets.

 

The GTX Notes bear 10% interest and 50% of the principal may be converted into shares of common stock on a one-time basis at a conversion price of $0.01 per share. The remaining 50% of the principal must be paid in cash. The closing occurred on April 12, 2022.

 

GTX changed its name into Metalert Inc. on or about September 20, 2022.

 

On September 30, 2022, GBT Tokenize, loaned MetAlert Inc., a Nevada corporation (f/k/a GTX Corp.) (“MetAlert”) $90,000. For such loan, MetAlert provided Tokenize a promissory note of $90,000 which is due and payable together with interest of 5% upon the earlier of September 19, 2023 or when declared by Tokenize.

 

MetAlert designs, manufactures and sells various interrelated and complementary products and services in the wearable technology and IoMT (Internet of Medical Things) marketplace.

 

On or about January 31, 2023 GTB Tokenize Corp the Company’s 50% owned subsidiary, assigned $7,500 from the GTX Notes to Stanley Hills, LLC, which in turn converted said $7,500 plus interest into 812,671 GTX shares. Stanley Hills, LLC credit GBT Tokenize for $146,037 for the transaction, reducing its credit outstanding balances with the Company and GBT Tokenize Corp.

 

As of June 30, 2023 the notes had an outstanding balance of $ $182,500 and accrued interest of $ $14,716. As of December 31, 2022, the notes had an outstanding balance of $190,000 and accrued interest of $8,475.

 

As of March, 31, 2023 and December 31, 2022, the marketable security had a FV of $12,506 and $12,538, respectively.

 

Note 5 – Avant Investment

 

On April 3, 2023, GBT Tokenize Corp. (“Seller”), a subsidiary that is owned 50% by the Company (“GBT”) entered into an Asset Purchase Agreement (“APA”) with Trend Innovation Holdings, Inc. (“TREN”), in which GBT consented, pursuant to which Seller sold certain assets relating to proprietary system and method named Avant-Ai, which is a text-generation, deep learning self-training model (the “System”).

 

In consideration of acquiring the System, TREN is required to issue to the Seller 26,000,000 common shares of TREN (the “Shares”). The Shares will be restricted per Rule 144 as promulgated under the Securities Act of 1933, as amended (the “1933 Act”) and Seller agreed to a lock-up period of nine (9) months following closing (the “Lock Up Term”). In the event that TREN is unable to up-list to Nasdaq either through a business combination or otherwise prior to the expiration of the Lock Up Term, the Seller may request within three (3) business days of the expiration of the Lock-Up Term, that all transactions contemplated by the APA be unwound.

 

In addition, TREN, Seller and GBT entered into a license agreement regarding the System, granting the Seller and/or GBT a perpetual, irrevocable, non-exclusive, non-transferable license for using the System to be used in its own development, as in-house tool, where Seller or GBT may not sublicense its rights hereunder to any customer or client.

 

On July 18, 2023 TREN changed its name into: Avant Technologies, Inc and its ticker symbol on OTC Markets was changed into AVAI.

 

As APA is contingent per the Lock Up Term that all transactions contemplated by the APA maybe unwound, management did not record the transaction.

 

Note 6 – Impaired Investment

 

15 

 

 

Investment in GBT Technologies, S.A.

 

On June 17, 2019, the Company, AltCorp Trading LLC, a Costa Rica company and a wholly-owned subsidiary of the Company (“AltCorp”), GBT Technologies, S.A., a Costa Rica company (“GBT-CR”) and Pablo Gonzalez, a shareholder’s representative of GBT-CR (“Gonzalez”), entered into and closed an Exchange Agreement (the “GBT Exchange Agreement”) pursuant to which the parties exchanged certain securities. In accordance with the Exchange Agreement, AltCorp acquired 625,000 shares of GBT-CR representing 25% of its issued and outstanding shares of common stock from Gonzalez for the issuance of 20,000 shares of Series H Convertible Preferred Stock of the Company and a Convertible Note in the principal amount of $10,000,000 issued by the Company (the “Gopher Convertible Note”) as well as the transfer and assignment of a Promissory Note payable by Gopher Protocol Costa Rica Sociedad De Responsabilidad Limitada to the Company of $5,000,000 dated February 6, 2019 (of which the underlying security for this Promissory Note is 30,000,000 restricted shares of common stock of Mobiquity Technologies, Inc. (“Mobiquity”) and 60,000,000 restricted shares of common stock of Mobiquity.

 

The Gopher Convertible Note bears interest of 6% and is payable at maturity on December 31, 2021. At the election of Gonzalez, the Gopher Convertible Note can be converted into a maximum of 20,000 shares of Series H Preferred Stock. Each share of Series H Preferred Stock is convertible, at the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($500 per share). The Series H Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series H Preferred Stock shall be entitled to one vote for each share of common stock that the Series H Preferred Stock may be convertible into. Upon conversion of the Gopher Convertible Note and the 20,000 shares of Series H Preferred Stock, Gonzalez would be entitled to less than 50% of the resulting outstanding shares of common stock of the Company following conversion in full and, as a result, such transaction is not considered a change of control.

 

On May 19, 2021, the Company, entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of Note Balance Principal and Accrued Interest (the “Gonzalez Agreement”) with third party, GBT-CR, IGOR 1 Corp and Gonzalez. Pursuant to the Gonzalez Agreement, without any party admission of liability and to avoid litigation, the parties had agreed to (i) extend the GBT Convertible Note maturity date to December 31,2022, (ii) amend the GBT Convertible Note terms to include a beneficial ownership blocker of 4.99% and a modified conversion feature to the GBT Convertible Note with 15% discount to the market price during the 20 trading day period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT Convertible Note by Gonzalez to a third party.

 

GBT-CR is in the business of the strategic management of BPO (Business Process Outsourcing) digital communications processing for enterprises and startups, distributed ledger technology development, AI development and fintech software development and applications.

 

The Company accounted for its investment in GBT-CR using the equity method of accounting; however, in 2020, the Company owned less than 20% after GBT-CR issued additional shares to other investors therefore exercised no control over GBT-CR; therefore, this investment is currently accounted for under the cost method. Moreover, on March 19, 2020, California Governor Gavin Newsom issued a stay-at-home order to protect the health and well-being of all Californians and to establish consistency across the state in order to slow the spread of COVID-19. California was therefore under strict quarantine control and travel has been severely restricted, resulting in disruptions to work, communications, and access to files (due to limited access to facilities). The stay-at-home order was lifted in California only on January 25, 2021. As such, the Company was unable to access or to contact GBT-CR on an on-going basis, and cannot get information about GBT-CR.

 

Investment in Joint Venture – GBT Tokenize Corp

 

On July 20, 2023, the Company through its wholly owned inactive subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into an Amended and Restated Joint Venture (the “2023 Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and GBT Tokenize Corp (“GBT Tokenize”).

  

16 

 

 

On March 6, 2020, the Company through Greenwich entered into a Joint Venture and Territorial License Agreement (the “2020 Tokenize Agreement”) with Tokenize-It, S.A. (“Tokenize”). Under the 2020 Tokenize Agreement, the parties formed GBT Tokenize and Tokenize contributed its technology portfolio as described in the 2020 Tokenize Agreement with each Tokenize and the Company owning 50% of GBT Tokenize. The purpose of GBT Tokenize is to develop, maintain and support source codes for its proprietary technologies including advanced mobile chip technologies, tracking, radio technologies, AI core engine, electronic design automation, mesh, games, data storage, networking, IT services, business process outsourcing development services, customer service, technical support and quality assurance for business, customizable and dedicated inbound and outbound calls solutions, as well as digital communications processing for enterprises and start-ups (“Technology Portfolio”). In addition to the Technology Portfolio, Tokenize contributed the services and resources for the development of the Technology Portfolio to GBT Tokenize. The Company contributed 2,000,000 shares of common stock.

  

On May 28, 2021, the parties agreed to amend the 2020 Tokenize Agreement to expand the territory granted for the Technology Portfolio under the license to GBT Tokenize to include the entire continental United States. The Company issued GBT Tokenize an additional 14,000,000 shares of common stock. On June 30, 2021, Tokenize and its shareholder assigned all their rights under the 2020 Tokenize Agreement, including the Company’s pledged 50% ownership in GBT Tokenize to Magic.

  

On April 11, 2022, the Company, through Greenwich, entered into a Master Joint Venture and Territorial License Agreement (the “2022 Tokenize Agreement”) with Magic and Tokenize which replaced the 2020 Tokenize Agreement. The Company issued GBT Tokenize an additional 150,000,000 shares of common stock of the Company.

  

GBT Tokenize has developed a vital device based on the Technology Portfolio that is ready for commercialization, as well as certain derivative technologies, which positioned GBT Tokenize to further develop or license certain code sources. On April 3, 2023, GBT Tokenize entered its first commercial transaction to date through the sale of the Avant-AI! technology that been developed by GBT Tokenize, based on the Technology Portfolio pursuant to which GBT Tokenize received 26,000,000 shares of common stock of Buyer’s shares – Avant Technologies, Inc.

  

The 2023 Tokenize Agreement restated and replaced the 2022 Tokenize Agreement. Pursuant to the 2023 Tokenize Agreement, as a result of the contribution of the Technology Portfolio by Tokenize and the subsequent contribution of services for the development of the Technology Portfolio by Tokenize and Magic, GBT Tokenize has been able to continue in operation, which has benefited the Company despite its contribution of 166 million shares of common stock valued at approximately $50,000. In order to maintain its 50% ownership interest in GBT Tokenize, the Company agreed to contribute its portfolio of intellectual property to GBT Tokenize and issue to GBT Tokenize 1,000 shares of Series I Preferred Stock (the “Series I Stock”) with a stated value of $35,000 per share which is convertible into common stock of the Company by dividing the stated value by the conversion price of $0.0035, which, if converted in full would result in the issuance of 10 billion shares of common stock of the Company. Further, the Series I Stock will vote on an as converted basis.

  

The Company pledged its 50% ownership in GBT Tokenize and its 100% ownership of Greenwich to Magic to secure its Technology Portfolio investment.

  

Although the investment was impaired, the product development is still ongoing. The carrying amount of this investment at June 30, 2023 and December 31, 2022, was $0 and $0, respectively.

 

Note 7 – Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses at June 30, 2023 and at December 31, 2022 consist of the following:

 

               
    2023   2022
Accounts payable   $ 1,029,063     $ 1,530,762  
Accrued liabilities     1,182,390       1,513,261  
Accrued interest     3,578,226       3,196,611  
Total   $ 5,789,679     $ 6,240,634  

  

Note 8 – Unearned Revenue

 

17 

 

 

Unearned revenue represents the net amount received for the purchase of products that have not seen shipped to the Company’s customers. In 2018, the Company ran pre-sales efforts for its pet tracker product and received prepayments for its product. The Company has $nil and $48,921 of unearned revenue at June 30, 2023 and December 31, 2022, respectively.

 

Note 9 – Convertible Notes Payable, Non-related Partied and Related Party

 

Convertible notes payable – non related parties at June 30, 2023 and at December 31, 2022 consist of the following:

  

               
    June 31,   December 31,
    2023   2022
Convertible note payable to GBT Technologies S.A   $ 5,485,746     $ 6,395,531  
Convertible notes payable to 1800     113,260       191,275  
Convertible notes payable to Glen     462,500        
Total convertible notes payable, non related parties     6,010,926       6,586,788  
Unamortized debt discount     (