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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 September 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  

 

8557 N West Knoll Dr. West Hollywood CA 90069  

(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  8,653,695,062 Common Shares
(Class) (Outstanding at November 20, 2023)

 

 

 

 

GBT TECHNOLOGIES INC.

 

TABLE OF CONTENTS

 

PART I. Financial Information   Page 
       
Item 1. Condensed Consolidated Financial Statements  
       
  Condensed Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022 (Audited/As Restated)   2
       
  Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (Unaudited/As Restated)   3
       
  Condensed Consolidated Statements of Stockholder’s Deficit for the three and nine months Ended September 30, 2023 and 2022 (Unaudited/As Restated)   4
       
  Condensed Consolidated Statements of Cash Flows for the nine months Ended September 30, 2023 and 2022 (Unaudited/As Restated)   6
       
  Notes to Condensed Consolidated Financial Statements (Unaudited)   7
       
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   43
       
Item 3. Quantitative and Qualitative Disclosures about Market Risk   47
       
Item 4. Controls and Procedures   47
       
PART II. Other Information   49
       
Signatures   65

 

1

 

 

Item 1: Condensed consolidated financial statements

 

GBT TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

           
ASSETS  September 30,  December 31,
   2023  2022
   (Unaudited)  (Audited/As Restated*)
Current Assets:          
Cash  $592   $13,058 
Prepaid       12,500 
Note receivable   200,772    198,475 
Marketable securities   38,506    16,198 
Current assets of discontinued operations       130,394 
Total current assets   239,870    370,625 
           
Total assets  $239,870   $370,625 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities:          
Accounts payable and accrued expenses (including related parties of $1,300,239 and $1,539,802)  $6,169,170   $6,103,900 
Accrued settlement   4,090,057    4,090,057 
Unearned revenue       48,921 
Contract liabilities       41,444 
Convertible notes payable, current, net of discount of $66,512 and $189,060   5,926,994    6,397,727 
Convertible notes payable, related party, net of discount of $0 and $0   661,395    116,605 
Notes payable, current, net of original issue discount of $4,077 and $0   79,249    41,137 
Notes payable, related party   140,000    140,000 
Due to related party       27,375 
Derivative liability   13,484,634    1,714,143 
Current liabilities of discontinued operations       171,362 
Total current liabilities   30,551,499    18,892,671 
           
Non-Current Liabilities:          
Note payable, noncurrent, net of discount of $0 and $0   312,219    308,863 
Total noncurrent liabilities   312,219    308,863 
           
Total liabilities   30,863,718    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 September 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 September 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 September 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 September 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 September 30, 2023 and December 31, 2022, respectively        
Common stock, $0.00001 par value; 10,000,000,000 shares authorized;  6,903,695,062 and 1,535,593,440 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively   69,038    15,356 
Treasury stock, at cost; 21 shares at September 30, 2023 and December 31, 2022, respectively   (643,059)   (643,059)
Stock loan receivable   (7,610,147)   (7,610,147)
Additional paid in capital   292,353,890    288,664,858 
Accumulated deficit   (314,837,377)   (299,257,917)
Total stockholders’ deficit   (30,667,655)   (18,830,909)
Non-Controlling Interest   43,807     
Total stockholders’ deficit attributable to GBT Technologies, Inc.   (30,623,848)   (18,830,909)
Total liabilities and stockholders’ deficit  $239,870   $370,625 

 

*The following audited balances were updated to reflect the discontinued operations of Mahaser Ltd. 

   

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


2

 


GBT TECHNOLOGIES INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited/As Restated)

 

                     
   Three months ended September 30,  Nine months ended September 30,
   2023  2022*  2023  2022*
Sales - related party  $   $45,000   $   $90,000 
Total sales       45,000        90,000 
Cost of goods sold                
Gross profit       45,000        90,000 
                     
Operating expenses:                    
 General and administrative expenses   47,359    105,872    287,688    338,845 
 Marketing expenses   80,311    87,900    192,308    521,200 
 Professional expenses   189,749    378,226    607,509    1,499,493 
 Total operating expenses   317,419    571,998    1,087,505    2,359,538 
                     
Loss from operations   (317,419)   (526,998)   (1,087,505)   (2,269,539)
                     
Other income (expense):                    
 Amortization of debt discount   (29,927)   (54,132)   (298,348)   (362,011)
 Change in fair value of derivative liability   365,121    (354,869)   (12,663,365)   2,795,870 
 Interest expense and financing costs   (156,497)   (261,834)   (2,111,400)   (731,126)
 Gain on debt extinguishment           315,297     
 Gain on RJW settlement        3,012,633        3,012,633 
 Gain on bad debt               50,000 
 Gain on loss of control   38,385        38,385     
 Change in fair value of marketable securities       (50,537)   (3,692)   (290,537)
 Other income - related party licensing income   66,353    7,814    269,553    15,699 
 Total other income (expense)   283,435    2,299,075    (14,453,570)   4,490,528 
                     
Income (loss) before income taxes   (33,984)   1,772,077    

(15,541,075

)   2,220,989 
                     
Income tax expense                
                     
Loss from continuing operations   (33,984)   1,772,077    (15,541,075)   2,220,989 
                     
Discontinued operations:                    
 Gain/(Loss) from discontinued operations   (38,385)   (1,613)   (38,385)   34,576 
                     
Net income (loss)  $(72,369)  $1,770,464   $(15,579,460)  $2,255,565 
                     
Less: net loss attributable to the noncontrolling interest   193        43,807     
                     
Net loss attributable to GTB Technologies Inc.   (72,562)   1,770,464    (15,623,267)   2,255,565 
                     
Weighted average common shares outstanding:                    
Basic   5,342,065,441    1,108,371,904    4,462,434,507    1,426,061,998 
Diluted   28,665,913,915    5,198,401,226    27,786,282,982    5,516,091,320 
Net loss per share (basic and diluted):                    
Basic  $(0.00)  $0.00   $(0.00)  $0.00 
Diluted   (0.00)   0.00    (0.00)   0.00 

 

*The following unaudited balances were updated to reflect the discontinued operations of Mahaser Ltd. 

 

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/As Restated*)

 

                                              
               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   $(23,660,850)
                                              
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                           (9,826,830)   (6,741)   (9,833,571)
                                              
Balance, June 30, 2023   5,550,753,886   $55,508   $1,040   $(643,059)  $(7,610,147)  $291,992,310   $(314,764,815)   43,614   $(30,926,588)
                                              
Common stock issued for conversions   1,352,941,176    13,529                101,471            115,000 
Fair value of derivative liability due to conversions                       260,109            260,109 
Net loss                           (72,562)   193    (72,369)
                                              
Balance, September 30, 2023   6,903,695,062   $69,037   $1,040   $(643,059)  $(7,610,147)  $292,353,890   $(314,837,377)   43,807   $(30,623,848)

 

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

 

4

 

 

Balance, December 31, 2021   33,200,198   $332   $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)
                                              
Common stock issued for conversions   206,000,000    2,060                268,240.00             270,300 
Fair value of derivative liability due to conversions                       314,029             314,029 
Net loss                           1,770,464.00        1,770,464 
                                              
Balance, September 30, 2022*   1,183,741,469   $11,837   $1,040   $(643,059)  $(7,610,147)  $288,199,959   $(302,326,207)      $(22,367,617)

 

*The following unaudited balances were updated to reflect the discontinued operations of Mahaser Ltd.

 

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

 

5

 

 

GBT TECHNOLOGIES INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

                 
    For the nine months Ended September 30,
    2023   2022 (As Restated*)
Cash Flows From Operating Activities:                
Loss from continuing operations   $ (15,541,075 )   $ 2,220,989  
Less: Loss from discontinued operations, net of tax     (38,385 )     34,576  
Net income (loss)     (15,579,460 )     2,255,565  
 Adjustments to reconcile net loss to net cash used in operating activities:                
 Amortization of debt discount     298,348       362,011  
 Change in fair value of derivative liability     12,663,365       (2,795,870 )
 Excess of debt discount and financing costs     1,500,196       34,175  
 Shares issued for services     80,000        
 Change in fair value of market equity security     3,692       290,538  
Gain on debt extinguishment     (315,297 )      
Loss on loss of control     (38,385 )      
Gain on debt settlement           (3,012,633 )
                 
 Changes in operating assets and liabilities:                
 Account receivable           (19,227 )
 Other receivable     (2,297)       3,745,179  
Prepaid     12,500        
 Inventory           (7,158 )
 Inventory in transit           (43,872 )
 Unearned revenue     (48,921 )     (225 )
 Contract liabilities     (41,444 )     (6,056 )
 Accounts payable and accrued expenses     1,382,819       (469,014 )
Net cash used in operating activities     (72,498 )     333,414  
                 
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       300,000  
 Issuance of note receivable           (190,000 )
 Proceeds from sales of common stock           231,865  
 Repayments to related party     (27,375 )     (664,225 )
Repayment of Convertible note     (35,822 )      
 Proceeds from related party           634,176  
Repayment of note payable     (61,071 )      
 Issuance of notes payable     92,150        
Net cash provided by financing activities     60,032       311,816  
                 
Net increase in cash     (12,466 )     370,230  
                 
Cash, beginning of period     13,058       155,106  
                 
Cash, end of period   $ 592     $ 525,336  
                 
Cash paid for:                
 Interest   $     $  
 Income taxes   $     $  
                 
Supplemental non-cash investing and financing activities                
Debt discount related to convertible debt   $ 35,576     $ 325,916  
Reduction in derivative liability due to conversion   $ 2,262,793     $ 1,934,771  
Shares issued for conversion of convertible debt   $ 1,399,921     $ 1,972,164  
Share issuance for JV Metaverse   $     $ 5,000  
Share issuance for JV Tokenize   $     $ 1,500  

 

*The following unaudited balances were updated to reflect the discontinued operations of Mahaser Ltd.  

  

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

 

6

 

 

GBT Technologies, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the Nine Months Ended September 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. Effective July 1, 2023, the Company agreed to terminate the RSA with Mahaser Ltd.

 

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. As of September 30, 2023, the Company did not record the commercial transactions as it was contingent per the Lock-Up term.

 

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.

 

7

 

 

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.

 

On October 12, 2023, the Company amended its articles of incorporation to increase its authorized shares of common stock to 30,000,000,000 (the “Increase Amendment”). The Increase Amendment was approved by the board of directors as well as the shareholders holding in excess of a majority of the issued and outstanding voting shares of the Company.

 

Note 2 – Discontinued Operations

 

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. Effective July 1, 2023, the Company agreed to terminate the RSA with Mahaser Ltd.

 

The following table presents the aggregate carrying amounts of assets and liabilities of discontinued operations of Mahaser Ltd. in the consolidated balance sheet as of September 30, 2023:

 

     
Carrying amounts of assets included as part of discontinued operations:     
Cash and cash equivalents  $41,077 
Accounts receivable, net   35,536 
Inventory   12,860 
Other current assets   452 
Total assets classified as discontinued operations in the consolidated balance sheet  $89,925 
      
Carrying amounts of liabilities included as part of discontinued operations:     
Accounts payable and accrued expenses  $77,947 
Notes payable, noncurrent   91,332 
Total liabilities classified as discontinued operations in the consolidated balance sheet  $169,279 

 

The financial results of Mahaser Ltd. are present as income from discontinued operations, net of income taxes on our consolidated income through September 30, 2023, when our deconsolidation occurred. The following table presents the financial results of Mahaser:

 

8

 

 

                 
    Period ended September 30,
    2023   2022
Revenues   $ 349,204     $ 771,446  
Cost of revenue     324,918       530,003  
Gross profit     24,286       241,443  
                 
Operating expense                
Professional expenses     20,039       6,925  
General and administrative expenses     42,605       199,818  
Total operating expense     62,644       206,743  
Loss from operations of discontinued operations     (38,358)       34,701  
                 
Other expense                
Other income     10       2  
Nonoperating expense - interest expense and financing     37       127  
Total other expense     47       129  
                 
Loss from discontinued operations before provision for income taxes     (38,405)       34,572  
Provision for income taxes              
Loss from discontinued operations, net of income taxes   $ (38,405)     $ 34,572  

 

Note 3 – Going Concern

 

The accompanying CFS have been prepared assuming the Company will continue as a going concern. The Company has an accumulated deficit of $314,837,377 and has a working capital deficit of $30,311,629 as of September 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 4 – 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.

 

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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.

 

Effective July 1, 2023 the Company terminated its joint venture revenue sharing (“Termination Agreement”) with Mahaser LTD (“Mahaser”). Until June 30, 2023, 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 until June 30, 2023. The Company performs a qualitative assessment of Mahaser on an ongoing basis to determine if it continues to be the primary beneficiary. Per the Termination Agreement, the Company has no access to Mahaser and ceased consolidated Mahaser as it does not comply with the condition in the qualitative assess, and as such this CFS does not include Mahaser operations for the period ended September 30, 2023.

 

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 September 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.

 

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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 September 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:

 

  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.

 

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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.

 

As disclosed before, the Company entered into a Termination Agreement with Mahaser effective July 1, 2023. At September 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
September 30, 2023
  Fair Value Measurements at
September 30, 2023
Using Fair Value Hierarchy
        Level 1   Level 2   Level 3
Conversion feature on convertible notes   $ 13,484,634     $     $ 13,484,634     $  

 

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.

 

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:

 

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  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 – (Include up to September 30, 2023)

 

  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 September 30, 2023 and December 31, 2022, respectively.

 

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Contract liabilities

 

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 September 30, 2023. The contract liabilities as of September 30, 2023 and December 31, 2022 was $0 and $41,444, respectively.

 

On or about May 10, 2023 TGHI filed with the SEC Form 15 choosing to become a non-reporting entity. As such the Company void its entire contract liability with TGHI.

 

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.

 

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Effective July 1, 2023 the Company terminated its joint venture revenue sharing (“Termination Agreement”) with Mahaser LTD (“Mahaser”). Until June 30, 2023, 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. The Company evaluated for the period ended on June 30, 2023, 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):

 

     
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)

 

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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 

 

The periods ended on September 30, 2023 and December 31, 2022 does not include the result of operation by Mahaser, as it ceases being VIE.

 

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.

 

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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.

 

          
   September 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 
Series I preferred stock   1,000     
Warrants   70,770    70,770 
Convertible notes   78,364,606,196    3,949,223,831 
Total   78,364,743,666    3,949,360,301 

 

Management’s Evaluation of Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date of September 30, 2023, through the date which the CFS are issued. Based upon the review, other than described in Foot Note – 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.

 

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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 September 30, 2023.

 

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 September 30, 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 5 – 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 6 – 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”).

 

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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 September 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.

 

On or about May 10, 2023 TGHI filed with the SEC Form 15 choosing to become a none reporting entity. As such the Company depreciate its entire investment with TGHI.

 

MetAlert (prior name GTX Corp)

  

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.

 

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As of September 30, 2023 the notes had an outstanding balance of $182,500 and accrued interest of $18,272. As of December 31, 2022, the notes had an outstanding balance of $190,000 and accrued interest of $8,475.

 

As of September 30, 2023 and December 31, 2022, the marketable security had a FV of $38,506 and $12,538, respectively.

 

Note 7 – 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 8 – Impaired Investment

 

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.

 

20

 

 

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”).

 

21

 

 

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.

 

22

 

 

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 September 30, 2023 and December 31, 2022, was $0 and $0, respectively.

 

Note 9 – Accounts Payable and Accrued Expenses

 

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

 

          
   2023  2022
Accounts payable  $1,143,513   $1,436,266 
Accrued liabilities   1,300,239    1,471,023 
Accrued interest   3,725,418    3,196,611 
Total  $6,169,170   $6,103,900 

 

Note 10 – Unearned Revenue

 

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 $0 and $48,921 of unearned revenue at September 30, 2023 and December 31, 2022, respectively.

 

Note 11 – Convertible Notes Payable, Non-related Partied and Related Party

 

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

 

          
   September 30,  December 31,
   2023  2022
Convertible note payable to GBT Technologies S.A  $5,434,746   $6,395,531 
Convertible notes payable to 1800   96,260    191,275 
Convertible notes payable to Glen   462,500     
Total convertible notes payable, non related parties   5,942,926    6,586,788 
Unamortized debt discount   (66,512)   (189,060)
Convertible notes payable – non related parties   5,926,994    6,397,727 
Less current portion   (5,926,994)   (6,397,727)
Convertible notes payable – non related parties, long-term portion  $   $ 

 

23

 

 

$10,000,000 for GBT Technologies S. A. acquisition

 

In accordance with the acquisition of GBT-CR the Company issued a convertible note in the principal amount of $10,000,000. The convertible note bears interest of 6% and is payable at maturity on December 31, 2021. At the election of the holder, the 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). This convertible note may convert into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price with a 20-day look back immediately preceding the date of conversion and therefore recorded as derivative liability.

 

On May 19, 2021, the Company, Gonzalez, GBT-CR and IGOR 1 Corp entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of outstanding balance plus accrued interest (the “Gonzalez Agreement”). 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. As a result of the change in terms of this convertible note, the Company took a charge related to the modification of debt of $13,777,480 during the year ended December 31, 2021. This convertible note is recorded as derivative liability because of the discounted price on conversion.

 

During the period ended September 30, 2023, IGOR 1 converted $51,000 of the convertible note into 600,000,000 shares of the Company’s common stock.

 

As of September 30, 2023, the note had an outstanding balance of $5,434,746 and accrued interest of $2,487,222.

 

Paid Off Notes/Converted Notes

 

Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC -

 

On May 5, 2022, the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor (“DL”), pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Note”) of $244,500 for $203,500. The DL Note had a maturity date of August 4, 2023 and the Company had agreed to pay interest on the unpaid principal balance of the DL Note at 6.0% from the date on which the DL Note is issued (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the DL Note at any time from the Issue Date and continuing through 180 days following the Issue Date, provided it makes a payment including a prepayment premium to DL as set forth in the DL Note. The transactions described above funded on May 9, 2022.

 

24

 

 

The outstanding principal amount of the DL Note may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an Event of Default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

 

Unless the Company shall have first delivered to DL, at least 48 hours prior to the closing of any equity (or debt with an equity component) financing in an amount less than $150,000 (“Future Offering”), written notice describing the proposed Future Offering and providing the Buyer an option during the 48 hour period following delivery of such notice to DL the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering then the Company is restricted from conducting the Future Offering during the period beginning on the Issue Date and ending nine months following the Issue Date.

 

During the period ended March 31, 2023, the entire balance of convertible note of $114,100 plus accrued interest of $7,335 was converted into 367,004,026 shares of common stock.

 

Convertible Note - On September 13, 2022, the Company entered into a Securities Purchase Agreement (dated September 9, 2022) with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) of $116,200 with an original issue discount of $12,450 resulting in net proceeds of the Company of $103,750. The DL Note had a maturity date of September 9, 2023 and the Company had agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 12.0% from the date on which the DL Note is issued (the “Issue Date”). A one-time interest charge of 12% or $13,944 was applied on the Issue Date to the principal amount owed under the DL Note. Accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in ten payments of $13,014.40 resulting in a total payback to DL of $130,144. The first payment is due October 30, 2022 with nine subsequent payments each month thereafter. The Company shall have a five-day grace period with respect to each payment. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. This DL Note shall not be secured by any collateral or any assets of the Company. The outstanding principal amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 75% of the lowest trading price with a 10-day look back immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

 

During the period ended June 30, 2023, the company paid back $39,043 to 1800 Diagonal lending and the remaining convertible note balance been converted into 136,993,684 shares.

 

As of September 30, 2023, the note had an outstanding balance of $0 and an interest of $0.

 

25

 

 

Outstanding Notes

 

Glen Eagle

 

The Company entered into a series of loan arrangements with Glen Eagles Acquisition LP pursuant to which it received $512,500 in loans (the “Debt”) from August 2021 up to September 2022. The original funded amount of $457,500 included convertible feature into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion.

 

In order to include a convertible feature for the $55,000 which was not covered by convertible feature, on January 24, 2023, the Company issued a consolidated convertible promissory note to Glen Eagles Acquisition LP in the principal amount of $512,500, which include all prior convertible notes with addition of the $55,000 straight note. The convertible promissory note bears interest of 10% and is payable at maturity on December 31, 2023. Glen Eagles Acquisition LP may convert the consolidated convertible Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion. The Company recorded a loss on debt extinguishment of $92,737 at the issuance date.

 

As of September 30, 2023, the consolidated convertible note had an outstanding balance of $462,500 and an interest of $31,551.

 

Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC

 

Straight Note – with Convertible Feature - On March 1, 2023, the Company entered into a Securities Purchase Agreement, with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) of $59,408 with an original issue discount of $6,258 resulting in net proceeds of the Company of $53,150. The DL Note had a maturity date of June 1, 2024 and the Company had agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 12.0% from the date on which the DL Note is issued. A one-time interest charge of 12% or $7,128 was applied on the issuance date of the DL Note to the principal amount owed under the DL Note. Accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in ten payments of $6,654 resulting in a total payback to DL of $66,536. The first payment is due April 15, 2023 with nine subsequent payments each month thereafter. The Company shall have a five-day grace period with respect to each payment. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. This DL Note shall not be secured by any collateral or any assets of the Company.

 

The outstanding principal amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 75% of the lowest trading price during the 10 day period immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to affect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

 

26

 

 

As of September 30, 2023, the note had an outstanding balance of $19,485.

 

Convertible Note - On March 1, 2023, the Company entered into a Securities Purchase Agreement with DL pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Convertible Note”) of $62,680 for a purchase price of $52,150. The DL Convertible Note had a maturity date of June 1, 2024 and the Company had agreed to pay interest on the unpaid principal balance of the DL Convertible Note at the rate of 6.0% from the date on which the DL Convertible Note is issued until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the DL Convertible Note, provided it makes a payment including a prepayment to DL as set forth in the DL Convertible Note.

 

The outstanding principal amount of the DL Convertible Note may not be converted prior to the period beginning on the date that is 180 days following the date the DL Convertible Note is issued. Following the 180th day, DL may convert the DL Convertible Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Convertible Note), the DL Convertible Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Convertible Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

 

During the period ended September 30, 2023, 1800 Diagonal converted $17,000 of the convertible note into 200,000,000 shares of the Company’s common stock.

 

As of September 30, 2023, the note had an outstanding balance of $45,680 and accrued interest of $2,195.

 

Straight Note $47,208 - On April 24, 2023, the Company entered into a Securities Purchase Agreement, with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) in the aggregate principal amount of $47,208 with an original issue discount of $5,058 resulting in net proceeds of the Company of $42,150. The DL Note has a maturity date of April 24, 2024 and the Company has agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 12.0% per annum from the date on which the DL Note is issued (the “Issue Date”). A one-time interest charge of 12% or $5,664 was applied on the Issue Date to the principal amount owed under the DL Note. Accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in ten payments each in the amount of $5,287.20 resulting in a total payback to DL of $52,872. The first payment is due June 15, 2023 with nine subsequent payments each month thereafter. The Company shall have a five-day grace period with respect to each payment. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. This DL Note shall not be secured by any collateral or any assets of the Company.

 

27

 

 

The outstanding principal amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 75% of the lowest trading price with a 10-day look back immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to affect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

 

As of September 30, 2023, the note had an outstanding balance of $26,059 and accrued interest of $5,664.

 

Convertible Note $50,580 - On April 24, 2023, the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Note”) in the aggregate principal amount of $50,580 for a purchase price of $42,150. The DL Note has a maturity date of July 24, 2024 and the Company has agreed to pay interest on the unpaid principal balance of the DL Note at the rate of six percent (6.0%) per annum from the date on which the DL Note is issued (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the DL Note, provided it makes a payment including a prepayment to DL as set forth in the DL Note.

 

The outstanding principal amount of the DL Note may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price with a 20-day look back immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an Event of Default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.

 

As of September 30, 2023, the note had an outstanding balance of $50,580.

 

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

 

          
   September 30,  December 31,
   2023  2022
Convertible note payable to Stanley Hills   661,395    116,605 
Unamortized debt discount        
Convertible notes payable, net, related party   661,395    116,605 
Less current portion   (661,395)   (116,605)
Convertible notes payable, net, related party, long-term portion  $   $ 

 

28

 

 

Stanley Hills LLC

 

The Company entered into a series of loan agreements with Stanley Hills LLC (“Stanley”) pursuant to which it received more than $1,000,000 in loans (the “Debt”) from May 2019 up to December 2019. On February 26, 2020, in order to induce Stanley to continue to provide funding, the Company and Stanley entered into a letter agreement providing that the current note payable balance due to Stanley of $1,214,900 may be converted into shares of common stock of the Company at a conversion price equal to 85% multiplied by the lowest one trading price for the common stock during the 20-trading day period ending on the latest complete trading day prior to the conversion date. Since the conversion price will vary based on the Company’s stock price, the beneficial conversion feature associated with this note is accounted for as a derivative liability. Stanley had agreed to restrict its ability to convert the Debt and receive shares of common stock such that the number of shares of common stock held by it and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. During the year ended December 31, 2021, Stanley converted $1,231,466 of its convertible note plus interest into 4,420,758 shares of the Company’s common stock, and during the year ended December 31, 2021, Stanley loaned the Company an additional $325,000. Also, during the year ended December 31, 2021, the Company transferred the SURG shares received as repayment of $800,000 of this convertible note and also converted $126,003 of accrued interest into the principal balance. During the year ended December 31, 2021, Gonzalez assigned all his accrued balances of $424,731 to Stanley in a private transaction that the Company is not part to (See Note 10). On January 2, 2023, the Company issued a convertible promissory note to Stanley for its credit balances in the principal amount of $750,000. The convertible promissory note bears interest of 10% and is payable at maturity on June 30, 2024. Stanley may convert the consolidated convertible Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion. The Company recorded a gain on debt extinguishment of $408,034 at the issuance date.

 

As of September 30, 2023 and December 31, 2022 the principal balance of Stanley debt is $661,395 and 116,605 respectively. The unpaid interest of the Stanley debt at September 30, 2023 and December 31, 2022 was $48,867 and $11,247, respectively.

 

Discounts on convertible notes

 

The Company recognized debt discount of $298,348 and $307,879 during the nine months ended September 30, 2023 and 2022, respectively, related to the amortization of the debt discount on convertible notes. The unamortized debt discount at September 30, 2023 and at December 31, 2022 was $179,876 and $307,879, respectively.

 

A roll-forward of the convertible notes payable from December 31, 2022 to September 30, 2023 is below:

 

     
Convertible notes payable, December 31, 2022  $6,703,393 
Issued for cash   113,260 
Convertible note issued for accounts payable   1,262,500 
Payment with cash   (39,043)
Conversion to common stock   (1,347,709)
Other settlement   (37,500)
Convertible notes payable, September 30, 2023  $6,654,901 

 

29

 

 

Note 12 - Notes Payable, Non-related Parties and Related Party

 

Notes payable, non-related parties at September 30, 2023 and December 31, 2022 consist of the following:

 

   September 30,  December 31,
   2023  2022
1800 note  $45,546   $ 
SBA loan   350,000    350,000 
Total notes payable   395,546    350,000 
Unamortized debt discount   (4,077)    
Notes payable   391,469    350,000 
Less current portion   79,269    (41,137)
Notes payable, long-term portion  $312,200   $308,863 

 

SBA Loan

 

On June 22, 2020, the Company received a loan from the Small Business Administration under the Economic Injury Disaster Loan program related to the COVID-19 relief efforts. The loan bears interest at 3.75%, requires monthly principal and interest payments of $731 after 12 months from funding and is due 30 years from the date of issuance. The monthly payments have been extended by the SBA to all EIDL borrowers with additional 12 months. Monthly payments will be commenced on or around June 16, 2022. On October 1, 2021, the Company entered an Amended Loan Authorization and Agreement with the SBA providing for the modification of the Original Note providing for monthly principal and interest payments of $1,771 after 24 months from the Original Note commencing on or around June 22, 2022. On March 17, 2022 the SBA notified it deferred the payments to all COVID-19 EIDL loans will have the first payment due extended from 24-months to 30-months from the date of the note. The Modified Note will continue to bear interest at 3.75% and is due 30 years from the date of issuance of the Original Note. The Modified Note is guaranteed by Douglas Davis, the former CEO of the Company and current consultant, as well as by GBT Tokenize Corp. The additional funding of $200,000 was received by the Company on October 5, 2021. The balance of the note at September 30, 2023 and at December 31, 2022 was $350,000 and $350,000 plus accrued interest of $33,524 and $23,707, respectively. The Company did not perform any payment on the loan and seeking hardship from the SBA for reduce payment which was not yet addressed by the SBA.

 

Notes payable, related party at September 30, 2023 and December 31, 2022 consist of the following:

 

               
    September 30,   December 31,
    2023   2022
Alpha Eda note payable   $ 140,000     $ 140,000  
Total notes payable, related party     140,000       140,000  
Unamortized debt discount            
Notes payable, net, related party     140,000       140,000  
Less current portion     (140,000 )     (140,000 )
Notes payable, net, related party, long-term portion   $     $  

 

30

 

 

Alpha Eda

 

On November 15, 2020, the Company issued a promissory note to Alpha Eda, LLC (“Alpha”), a related party for $140,000. The note accrues interest at 10%, is unsecured and was due on September 30, 2021. On March 31, 2023 Alpha and the Company extended the note maturity to December 31, 2023. The balance of the note at September 30, 2023 and at December 31, 2022 was $140,000 and $140,000 plus accrued interest of $33,524 and $32,633, respectively.

 

Discounts on Promissory Note

 

The Company recognized debt discount of $70,588 and $0 during the period ended September 30, 2023 and December 31, 2022, respectively, related to the amortization of the debt discount on promissory notes. The unamortized debt discount at September 30, 2023 and at December 31, 2022 was $7,152 and $0, respectively.

 

Note 13 – Accrued Settlement

 

In connection with a legal matter filed by the Investor of the $8,340,000 Senior Secured Redeemable Convertible Debenture, on December 23, 2019, in the pending arbitration between the Company and the Investor, an Interim Award was entered in favor of the Investor. On January 31, 2020, the Company was informed that a final award was entered (the “Final Award”). The Final Award affirms that certain sections of the Senior Secured Redeemable Convertible Debenture (the “Debenture”) constitute unenforceable liquidated damages penalties and were stricken. Further, it was determined that the Investor was entitled to recovery of their attorney’s fees. Consequently, the arbitrator awarded Investor an award of $4,034,444 plus interest of 7.25% accrued from May 15, 2019 (presented separately in accounts payable and accrued expenses) and costs of $55,613. In connection with this settlement, the Company recognized a gain on the settlement of debt of $1,375,556 in 2019 as the difference between the carrying amount of the debt and the amount awarded by the arbitrator. The Company recorded accrued settlement of $4,090,057 and $4,090,057 at September 30, 2023 and at December 31, 2022, respectively. As the Investor claim in writing that it sold all the Company assets, management decided to issue the Investor an invoice against his Final Award at the end of the 2023 year and offset this liability.

 

Note 14 - Derivative Liability

 

Certain of the convertible notes payable discussed in prior Note - have a conversion price that can be adjusted based on the Company’s stock price which results in the conversion feature being recorded as a derivative liability.

 

The FV of the derivative liability is recorded and shown separately under current liabilities. Changes in the FV of the derivative liability is recorded in the statement of operations under other income (expense).

 

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The Company uses a weighted average Black-Scholes option pricing model with the following assumptions to measure the FV of derivative liability at September 30, 2023 and at December 31, 2022:

 

          
   September 30,  December 31,
   2023  2022
Stock price  $0.00009   $0.001 
           
Risk free rate   5.40-5.58%   4.42-4.76%
Volatility   302-357%   213-277%
    0.00009-    0.0015- 
Conversion/ Exercise price  $0.00085   $0.0017 
Dividend rate   0%   0%

 

The following table represents the Company’s derivative liability activity for the period ended September 30, 2023:

 

     
Derivative liability balance, December 31, 2022  $1,714,142 
Issuance of derivative liability during the period   1,369,920 
Fair value of beneficial conversion feature of debt converted   (2,262,793)
Change in derivative liability during the period   12,663,365 
Derivative liability balance, March 31, 2023  $13,484,634 

 

 Note 15 - Stockholders’ Equity

 

Common Stock

 

In July 7, 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 yet by the Company’s board.

 

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On October 12, 2023, the Company amended its articles of incorporation to increase its authorized shares of common stock to 30,000,000,000 (the “Increase Amendment”). The Increase Amendment was approved by the board of directors as well as the shareholders holding in excess of a majority of the issued and outstanding voting shares of the Company.

 

During the period ended September 30, 2023, the Company had the following transactions in its common stock:

 

  Of 5,268,101,622 Shares issued for the conversion of convertible notes of $1,347,709 and accrued interest of $52,211; and
     
  Of 100,000,000 Shares issued to Pacific Capital Markets LLC for certain for service agreement between Pacific Capital Markets LLC. and the Company. The value of the shares of $80,000 was determined based on the FV of the Company’s common stock at the time of issuance;

 

Series B Preferred Shares

 

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 $30 per share representing 30 posts 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.

 

As of September 30, 2023 and as of December 31, 2022, there were 45,000 Series B Preferred Shares outstanding.

 

Series C Preferred Shares

 

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 $0.02. The stated value is $11 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.

 

The issuance of the Series C Preferred Stock was made in reliance upon exemptions from registration pursuant to Section 4(a)(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.

 

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At September 30, 2023 and at December 31, 2022, GV owns 700 Series C Preferred Shares.

 

Series D Preferred Shares

 

As of September 30, 2023 and as of December 31, 2022, there are 0 and 0 shares of Series D Preferred Shares outstanding, respectively.

 

Series G Preferred Shares

 

As of September 30, 2023 and as of December 31, 2022, there are 0 and 0 shares of Series G Preferred Shares outstanding, respectively.

 

Series H Preferred Shares

 

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 of $10,000,000 issued by the Company (the “Gopher Convertible Note”) as well as additional consideration. 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 ($10 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.

 

As of September 30, 2023 and as of December 31, 2022, there are 20,000 shares of Series H Preferred Shares outstanding.

 

Series I Preferred Shares

 

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 and GBT Tokenize. 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.

 

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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.

 

As of September 30, 2023, there are 1,000 shares of Series I Preferred Shares outstanding.

 

Warrants

 

The following is a summary of warrant activity.

 

                     
         Weighted   
      Weighted  Average   
      Average  Remaining  Aggregate
   Warrants  Exercise  Contractual  Intrinsic
   Outstanding  Price  Life  Value
Outstanding, December 31, 2022    70,770   $205.07    0.30   $ 
Granted                    
Forfeited    60,100                
Exercised                    
Outstanding, September 30, 2023    10,670   $729.90    0.02   $ 
Exercisable, September 30, 2023    10,670   $729.90    0.02   $ 

 

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Note 16 - 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.

 

On October 10, 2019, the Company entered into a Joint Venture Agreement (the “BitSpeed Agreement”) with BitSpeed LLC, which is owned by Douglas Davis, the prior Company’s Chief Executive Officer (From January 1, 2019 to April 11, 2020), to form GBT BitSpeed Corp., a Nevada company (“GBT BitSpeed”). The purpose of GBT BitSpeed is to develop, maintain and support its proprietary Extreme Transfer Software Application Concurrency, a software application to transfer secure, accelerated transmission of large file data over networks, and connection to cloud storage, Network-Attached Storage (NAS) and Storage Area Networks (SANs) (“Concurrency”). BitSpeed shall contribute the services and resources for the development of Concurrency to GBT BitSpeed. The Company shall contribute 10 million shares of common stock of the Company to GBT BitSpeed. BitSpeed and the Company will each own 50% of GBT BitSpeed. The Company shall appoint two directors and BitSpeed shall appoint one director of GBT BitSpeed. In addition, GBT BitSpeed and Mr. Davis entered into a Consulting Agreement in which Mr. Davis is engaged to provide services for $10,000 per month payable quarterly which may be paid in shares of common stock calculated by the amount owed divided by the Company’s 20-day VWAP. Mr. Davis will provide services in connection with the development of the business as well as GBT BitSpeed’s capital raising efforts. The term of the Consulting Agreement was two years. The closing of the BitSpeed Agreement occurred on October 14, 2019. On March 31, 2023 Doug Davis gave notice to the Company of termination of the consulting agreement dated October 10, 2019.

 

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”). 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”).

 

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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.

 

Yello Partners Inc.

 

As of September 30, 2023 and as of December 31, 2022, the Company has $595,000 and $505,000 owed to Yello Partners, Inc., a Company owned by the CEO.

 

Alpha Eda Note Payable – Related Party

 

On November 15, 2020, the Company issued a promissory note to Alpha Eda, LLC (“Alpha”), a related party, for $140,000. The note accrues interest at 10%, is unsecured and was due on September 30, 2021. On March 31, 2023 Alpha and the Company extended the note maturity to December 31, 2023.

 

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Stanley Hills LLC Convertible Note Payable – Prior Related Party

 

On January 1, 2023, the Company issued a convertible promissory note to Stanley for its credit balances in the principal amount of $750,000. The convertible promissory note bears interest of 10% and is payable at maturity on June 30, 2024. Stanley may convert the consolidated convertible Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period preceding the date of conversion.

 

As of September 30, 2023, the Company has recorded an outstanding payable balance to Stanley amounted $788,210.

 

Consulting income for the period ended September 30, 2023 and for the year ended on December 31, 2022 were $0 and $45,000. Consulting income were derived from providing IT consulting services to Stanley Hills, a related party back then.

 

Note 17 - Contingencies

 

GBT Technologies, S.A.

 

On September 14, 2018, the Company entered into an Exclusive Intellectual Property License and Royalty Agreement (the “GBT License Agreement”) with GBT-CR, a fully compliant and regulated crypto currency exchange platform that currently operates in Costa Rica as a decentralized crypto currency platform, pursuant to which, among other things, the Company granted to GBT-CR an exclusive, royalty-bearing right and license relating intellectual property relating to systems and methods of converting electronic transmissions into digital currency as reflected in that certain patent filed with the United Stated Patent and Trademark Office on or about June 14, 2018 (EFS ID: 32893586; Application Number: 16008069; Type: Utility under 35 USC 111(a); Confirmation Number: 6787)(collectively, the “Digital Currently Technology”). Pursuant to the GBT License Agreement, the Company granted GBT-CR an exclusive worldwide license to use the Digital Currency Technology to make, use, sell, lease or otherwise commercialize and dispose of products and devices utilizing the Digital Currently Technology. Under the terms of the GBT License Agreement, the Company is entitled to receive a royalty payment of 2% of gross revenue of each licensed product sold by GBT-CR during the period starting in which revenue is first generated using the licensed products and continuing for five years thereafter. Upon signing the GBT-CR License Agreement, GBT-CR paid the Company $300,000 which is nonrefundable. The Company recognized the $300,000 as revenue during the years ended December 31, 2018. Upon GBT-CR making available for sale (the “Commercial Event”) an ICO (Initial Coin Offering) (the “Coin”), GBT-CR will make a payment to the Company of $5,000,000. Further, upon the Commercial Event, GBT-CR will grant the Company the ability to acquire 30% of the Coin at a 30% discount of such offering price of the Coin. The GBT License Agreement commenced as of the signing date and, unless terminated in accordance with the termination provisions of the GBT License Agreement, shall remain in force until the expiration of the patent pertaining to the Digital Currency Technology; provided that the right to use trade, secrets shall survive the expiration of the GBT License Agreement provided the Company has not