NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
A – ORGANIZATION
Overview
Global
Technologies, Ltd. (hereinafter the “Company”, “Our”, “We”, or “Us”) is a publicly
quoted company that was incorporated under the laws of the State of Delaware on January 20, 1999 under the name of NEW IFT
Corporation. On August 13, 1999, the Company filed an Amended and Restated Certificate of Incorporation with the State of Delaware
to change the name of the corporation to Global Technologies, Ltd. Our principal executive offices are located at 501 1st
Ave N., Suite 901, St. Petersburg, FL 33701 and our telephone number is (727) 482-1505. Our website address is www.globaltechnologiesltd.info.
The information contained on, or that can be accessed through, our website is not a part of this Annual Report on Form 10-K.
We have included our website address in this Annual Report solely as an inactive textual reference.
Prior
Operational History
From
inception until March 2011, Global Technologies was a technology portfolio company that acquired nascent technology and related
innovations, inventions and IP assets to enhance their growth and development. The Company built revenues and asset value through
a model of continuous growth, income from or sale of its portfolio holdings, and technology licensing or distribution agreements.
The
Company invested primarily in innovative and promising clean/renewable energy or bio-tech technologies that had reached the stage
in the critical Technology Development & Demonstration phase of the Innovative Cycle, which includes Prototype, Demonstration
and Market Analysis.
In
March 2011, the Company abandoned its operations. Mr. Jimmy Wayne Anderson, our sole officer and director, was appointed a director
of the Company in December 2017 and an officer in January 2018.
Current
Operations
Global
Technologies, Ltd (“Global”) is a holding corporation, which through its subsidiaries, has operations engaged in the
online sales of CBD and hemp related products, the acquisition of intellectual property in the safety and security space and as
a portal for entrepreneurs to provide immediate access to live shopping, e-commerce, product placement in brick and mortar retail
outlets and logistics.
On
November 30, 2019, the Company entered into a Purchase and Sale Agreement (the “Agreement”) for the purchase of TCBM
Holdings, LLC (“TCBM”). Under the terms of the Agreement, the Company issued a Convertible Promissory Note in the
amount of $2,000,000 to Jetco Holdings, LLC for the purchase of all issued and outstanding membership units of TCBM and its subsidiaries,
HMNRTH, LLC and 911 Help Now, LLC.
On
March 11, 2020, the Company, through its two wholly owned subsidiaries, HMNRTH, LLC (the “Seller”) and TCBM Holdings,
LLC (the “Owner”) (together Seller and Owner the “Selling Parties”) entered into an Asset Purchase Agreement
(the “Agreement”) with Edison Nation, Inc. and its wholly owned subsidiary, Scalematix, LLC (together the “Buyer”),
for the sale of certain assets in the health and wellness industry and related consumer products industry. Under the terms of
the Agreement, Buyer was to remit $70,850 via wire transfer at Closing and issue to a representative of the Selling Parties Two
Hundred Thirty-Eight Thousand Seven Hundred and Fifty (238,750) shares of restricted common stock. In addition, the Selling Parties
shall have the right to additional earn out compensation based upon the following metrics: (i) at such time as the purchased assets
achieve cumulative revenue of $2,500,000, the Selling Parties shall earn One Hundred Twenty-Five Thousand (125,000) shares of
common stock; and (ii) at such time as the purchased assets achieve cumulative revenue of $5,000,000, the Selling Parties shall
earn One Hundred Twenty-Five Thousand (125,000) shares of common stock. The Closing of the transaction occurred on March 11, 2020.
As of the date of this filing, the Company has received the 238,750 shares of restricted common stock valued at $477,500 and
the $70,850 in cash compensation due under the terms of the Agreement. The shares and cash compensation were subsequently transferred
to the principal of Jetco Holdings, LLC as payment against the November 30, 2019 convertible note. Please see NOTE F
- NOTES PAYABLE, THIRD PARTIES for further information.
Our
wholly owned subsidiaries:
About
TCBM Holdings, LLC
TCBM
Holdings, LLC (“TCBM”) was formed as a Delaware limited liability company on August 10, 2017. TCBM is a holding corporation,
which operated through its two wholly owned subsidiaries, HMNRTH, LLC and 911 Help Now, LLC.
About
HMNRTH, LLC
HMNRTH,
LLC (“HMN”) was formed as a Delaware limited liability company on July 30, 2019. HMNRTH operates as an online store
selling a variety of hemp and CBD related products. The Company’s business model is to bridge the gap between the lifestyle
and knowledge components within the cannabis industry. The Company’s goal is to educate every consumer while cultivating
an experience by providing quality products, branded cutting-edge content, and diversified product lines for any purpose. Most
importantly, we want our clients to discover their inner HMN, redefine their inner HMN and Empower their inner HMN.
In
September 2019, the Company entered into a Quality Agreement with Nutralife Biosciences for the development and production of
its CBD line of products. The Company’s product line includes hemp derived, full spectrum cannabidiol tinctures and creams
in varying sizes. The Company’s ecommerce website can be found at www.hmnrth.com.
In
order for the Company to generate revenue through HMNRTH, we will need to: (i) produce additional inventory for retail sales through
the Company’s ecommerce site or sales, or (ii) sales to third party distributors, or (iii) direct sales to brick and mortar
CBD retail outlets, or (iv) generate additional CBD formulas to be utilized in new products At present, the Company does not have
the required capital to initiate any of the options and there is no guarantee that we will be able to raise the required funds.
Regulation
of HMNRTH products:
The
manufacture, labeling and distribution of our products is regulated by various federal, state and local agencies. These governmental
authorities may commence regulatory or legal proceedings, which could restrict the permissible scope of our product claims or
the ability to sell our products in the future. The FDA regulates our nutraceutical and wellness products to ensure that the products
are not adulterated or misbranded.
We
are subject to additional regulation as a result of our CBD products. The shifting compliance environment and the need to build
and maintain robust systems to comply with different compliance in multiple jurisdictions increase the possibility that we may
violate one or more of the requirements. If our operations are found to be in violation of any of such laws or any other governmental
regulations that apply to us, we may be subject to penalties, including, without limitation, civil and criminal penalties, damages,
fines, the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business
and our financial results.
Failure
to comply with FDA requirements may result in, among other things, injunctions, product withdrawals, recalls, product seizures,
fines and criminal prosecutions. Our advertising is subject to regulation by the FTC under the FTCA. Additionally, some states
also permit advertising and labeling laws to be enforced by private attorney generals, who may seek relief for consumers, seek
class action certifications, seek class wide damages and product recalls of products sold by us. Any actions against us by governmental
authorities or private litigants could have a material adverse effect on our business, financial condition and results of operations.
About
911 Help Now, LLC
911
Help Now, LLC (“911”) was formed as a Delaware limited liability company on February 2, 2018. 911 was a holding company
of intellectual property in the safety and security space. At present, we own no intellectual property within our 911 subsidiary.
In order to generate future revenue within 911, we will need to identify and either acquire or license intellectual property.
In the event of an acquisition, we will then need to either develop products utilizing our intellectual property or license out
our intellectual property to a third party. There is no guarantee that we will be successful with an acquisition or licensing
of any intellectual property.
About
Markets on Main, LLC
Markets
on Main, LLC (“MOM”) was formed as a Florida limited liability company on April 2, 2020. MOM is A full service, sales
and distribution, third-party logistics provider and portal to multi-channel sales opportunities. MOM’s focus is on bringing
small businesses and entrepreneurs to large opportunities and distribution. MOM will provide the following services to its clients:
inventory management, brand management, fulfillment and drop-ship capabilities, retail distribution and customer service. MOM’s
website can be found at www.marketsonmain.com.
Consultants
On
January 2, 2020, the Company entered into a Consulting Agreement (the “Agreement”) with Timothy Cabrera (the “Consultant”).
Under the terms of the Agreement, the Consultant is to provide services to further the business plan of the Company’s subsidiaries,
seek and advise the Company on the acquisition of potential products, seek acquisition candidates and on the sale of any inventory.
The Agreement has a term of one (1) year and the Consultant is to be compensated Two Hundred Fifty Thousand and NO/100 Dollars
($250,000).
On
January 2, 2020, the Company entered into a Consulting Agreement (the “Agreement”) with Brian McFadden (the “Consultant”).
Under the terms of the Agreement, the Consultant is to provide services to manage the Company’s HMNRTH subsidiary, manage
the process of new CBD formulas from development to sale, seek and advise the Company on the acquisition of potential products
and on the sale of any inventory. The Agreement has a term of one (1) year and the Consultant is to be compensated Two Hundred
Fifty Thousand and NO/100 Dollars ($250,000).
On
August 22, 2019, the Company entered into a Consulting Agreement (the “Agreement”) with Sylios Corp (the “Consultant”),
an entity controlled by the Company’s President, Jimmy Wayne Anderson. Under the terms of the Agreement, the Consultant
is to provide services related to acquisitions, mergers and certain day to day tasks of managing a public company. As compensation,
the Company shall pay Consultant $50,000 through the issuance of ten (10) shares of the Company’s Series L Preferred Stock.
The Company issued the shares of Series L Preferred Stock on September 2, 2019. The Agreement has a term of six (6) months or
until the Consultant completes the services requested.
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary
of Significant Accounting Policies
This
summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial
statements. The financial statements and notes are representations of the Company’s management, which is responsible for
their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States
and have been consistently applied in the preparation of the financial statements.
Principles
of Consolidation
The
consolidated financial statements include the accounts of Global Technologies. All inter-company balances and transactions have
been eliminated in consolidation.
Cash
Equivalents
Investments
having an original maturity of 90 days or less that are readily convertible into cash are considered to be cash equivalents. For
the periods presented, the Company had no cash equivalents.
Accounts
Receivable and Allowance for Doubtful Accounts:
Accounts
receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established,
as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in
estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for
doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due
from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts
are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process
consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition
of Global Technologies’ customers. Based on a review of these factors, the Company establishes or adjusts the allowance
for specific customers and the accounts receivable portfolio as a whole. At June 30, 2020 and 2019, an allowance for doubtful
accounts was not considered necessary as all accounts receivable were deemed collectible.
Accounts
receivable – related party and allowance for doubtful accounts
Accounts
receivable – related party are presented net of an allowance for doubtful accounts. The Company maintains allowances for
doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and
specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual
receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment
history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection.
Management
believes that the accounts receivable are fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required
on its accounts receivable – related party at June 30, 2020.
Concentrations
of Risks
Concentration
of Accounts Receivable –At June 30, 2020, one customer accounted for 100% of the Company’s total accounts
receivable.
Concentration
of Revenues – For the year ended June 30, 2020, one customer accounted for 100% of the Company’s
total revenues.
Concentration
of Suppliers – The Company relies on a limited number of suppliers and contract manufacturers.
In particular, a single supplier is currently the sole manufacturer of the Company’s CBD products.
Concentration
of Loans Receivable – At June 30, 2020, one borrower accounted for 100% of the Company’s total loans
receivable.
Income
Taxes
In
accordance with Accounting Standards Codification (ASC) 740 - Income Taxes, the provision for income taxes is computed using the
asset and liability method. The asset and liability method measures deferred income taxes by applying enacted statutory rates
in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts
on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they
occur. A valuation allowance is provided when it is not more likely than not that a deferred tax asset will be realized.
We
expect to recognize the financial statement benefit of an uncertain tax position only after considering the probability that a
tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold,
the amount to be recognized in the financial statements will be the benefit expected to be realized upon settlement with the tax
authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of June 30, 2020,
we had no uncertain tax positions. We recognize interest and penalties, if any, related to uncertain tax positions as general
and administrative expenses. We currently have no federal or state tax examinations nor have we had any federal or state examinations
since our inception. To date, we have not incurred any interest or tax penalties.
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Financial
Instruments and Fair Value of Financial Instruments
We
adopted ASC Topic 820, Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a
recurring basis. ASC Topic 820 establishes a common definition for fair value to be applied to existing US GAAP that requires
the use of fair value measurements that establishes a framework for measuring fair value and expands disclosure about such fair
value measurements.
ASC
820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Additionally, ASC Topic 820 requires the use of valuation techniques that
maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level
1:
|
Observable
inputs such as quoted market prices in active markets for identical assets or liabilities
|
Level
2:
|
Observable
market-based inputs or unobservable inputs that are corroborated by market data
|
Level
3:
|
Unobservable
inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
|
The
carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial
assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement
is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when
a significant event occurs. Except for the derivative liability, we had no financial assets or liabilities carried and measured
at fair value on a recurring or nonrecurring basis during the periods presented.
Derivative
Liabilities
We
evaluate convertible notes payable, stock options, stock warrants and other contracts to determine if those contracts or embedded
components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40,
Derivative Instruments and Hedging: Contracts in Entity’s Own Equity.
The
result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument
and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as
a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion
or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value
is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification
under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date.
Please see NOTE H - DERIVATIVE LIABILITY for further information.
Long-lived
Assets
Long-lived
assets such as property and equipment and intangible assets are periodically reviewed for impairment. We test for impairment losses
on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset
may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an
asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment
evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows
could be different from those estimated by management which could have a material effect on our reporting results and financial
positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market
values and third-party independent appraisals, as considered necessary.
Marketable
Equity Securities
Marketable
equity securities are stated at lower of cost or market value with unrealized gains and losses included in operations. The Company
has classified its marketable equity securities as trading securities.
Deferred
Financing Costs
Deferred
financing costs represent costs incurred in the connection with obtaining debt financing. These costs are amortized ratably and
charged to financing expenses over the term of the related debt.
Revenue
recognition
Generally,
the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five-step process
outlined in the Accounting Standards Codification (“ASC”) 606:
Step
1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved
the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights
regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to
be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of
the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
Step
2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance
obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct
goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract
includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are
capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted
for as a combined performance obligation.
Step
3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize
as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to
determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration,
the Company would determine the amount of variable consideration that should be included in the transaction price based on expected
value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable
that a significant future reversal of cumulative revenue under the contract would not occur.
Step
4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate
the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the
entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction
price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception.
Step
5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods
or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of
the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use
of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from
directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present
obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s).
Performance obligations can be satisfied at a point in time or over time.
Substantially
all of the Company’s revenues continue to be recognized when control of the goods is transferred to the customer, which
is upon shipment of the finished goods to the customer. All sales have fixed pricing and there are currently no material variable
components included in the Company’s revenue. Additionally, the Company will issue credits for defective merchandise, historically
these credits for defective merchandise have not been material. Based on the Company’s analysis of the new revenue standards,
revenue recognition from the sale of finished goods to customers, which represents substantially all of the Company’s revenues,
was not impacted by the adoption of the new revenue standards.
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Stock-Based
Compensation
The
Company accounts for stock-based compensation for employees and directors in accordance with ASC 718, Compensation (“ASC
718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized
in the statement of operations based on their fair values. Under the provisions of ASC 718, stock-based compensation costs are
measured at the grant date, based on the fair value of the award, and are recognized as expense over the employee’s requisite
service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options
are estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate,
risk free interest rate and the expected life. The Company expenses stock-based compensation by using the straight-line method.
In accordance with ASC 718 and, excess tax benefits realized from the exercise of stock-based awards are classified as cash flows
from operating activities. All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment
awards) are recognized as income tax expense or benefit in the condensed consolidated statements of operations.
The
Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either
the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable,
using the measurement date guidelines enumerated in ASU 2018-07.
Related
Parties
A
party is considered to be related to us if the party directly or indirectly or through one or more intermediaries, controls, is
controlled by, or is under common control with us. Related parties also include our principal owners, our management, members
of the immediate families of our principal owners and our management and other parties with which we may deal if one party controls
or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or
operating policies of the transacting parties, or if it has an ownership interest in one of the transacting parties and can significantly
influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate
interests, is also a related party.
Advertising
Costs
Advertising
costs are expensed as incurred. For the periods presented, we had no advertising costs.
Loss
per Share
We
compute net loss per share in accordance with FASB ASC 260. The ASC specifies the computation, presentation and disclosure requirements
for loss per share for entities with publicly held common stock.
Basic
loss per share amounts are computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted
net loss per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such
as stock options, warrants and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted
net loss per share are excluded from the calculation. For the years ended June 30, 2020 and 2019, the Company excluded
25,621,051,276 and 5,309,000,000, respectively, shares relating to convertible notes payable to third parties, convertible notes
payable related parties, shares issuable upon the exercise of the Armada warrant and share issuable upon conversion of the Company’s
series L Preferred stock.
Recently
Enacted Accounting Standards
In
May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts
with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU
2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration
to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this
core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required
under existing U.S. GAAP. As amended by the FASB in July 2015, the standard is effective for annual periods beginning after December
15, 2017 for public companies, and interim periods therein, using either of the following transition methods: (i) a full retrospective
approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical
expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date
of adoption (which includes additional footnote disclosures). ASU 2014-09 was adopted on July 1, 2019.
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
In
June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”
(“ASU 2016-13”). Financial Instruments—Credit Losses (Topic 326) amends guideline on reporting credit losses
for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis,
Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its
current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted
from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale
debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit
losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and
net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt
securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any
other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this
ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
We are currently evaluating the impact of the adoption of ASU 2016-13 on our financial statements.
In
July 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2017-11. Among
other things, ASU 2017-11 provides guidance that eliminates the requirement to consider “down round” features when
determining whether certain financial instruments or embedded features are indexed to an entity’s stock and need to be classified
as liabilities. ASU 2017-11 provides for entities to recognize the effect of a down round feature only when it is triggered and
then as a dividend and a reduction to income available to common stockholders in basic earnings per share. The guidance is effective
for annual periods beginning after December 15, 2018; early adoption is permitted. The Company has adopted ASU 2017-11. As a result,
we have not recognized the fair value of the warrants containing down round features as liabilities.
In
August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting
models for convertible debt instruments and convertible preferred stock. As well as amend the guidance for the derivatives
scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions.
In addition, this ASU improves and amends the related EPS guidance. This standard is effective for us on May 1, 2022, including
interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method
of transition. We are currently evaluating the impact of the adoption of ASU 2020-06 on our financial statements.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from those estimates.
Fair
Value of Financial Instruments
The
Company defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. Financial instruments included in the Company’s financial statements include cash,
accounts payable and accrued expenses, accrued interest payable, loans payable to related parties, notes payable to third parties,
notes payable to related parties and derivative liability. Unless otherwise disclosed in the notes to the financial statements,
the carrying value of financial instruments is considered to approximate fair value due to the short maturity and characteristics
of those instruments. The carrying value of debt approximates fair value as terms approximate those currently available for similar
debt instruments.
Goodwill
After
completing the purchase price allocation, any residual of cost over fair value of the net identifiable assets and liabilities
was assigned to the unidentifiable asset, goodwill. Formerly subject to mandatory amortization, this now is not permitted to be
amortized at all, by any allocation scheme and over any useful life. Impairment testing, using a methodology at variance with
that set forth in FAS 144 (which, however, continues in effect for all other types of long-lived assets and intangibles other
than goodwill), must be applied periodically, and any computed impairment will be presented as a separate line item in that period’s
income statement, as a component of income from continuing operations (unless associated with discontinued operations, in which
case, the impairment would, net of income tax effects, be combined with the remaining effects of the discontinued operations.
In accordance with Statement No. 142, “Goodwill and Other Intangible Assets,” the Company does not amortize goodwill,
but performs impairment tests of the carrying value at least periodically.
Intangible
Assets
Intangible
assets are stated at the lesser of cost or fair value. Please
see NOTE C – ACQUISITION OF TCBM HOLDINGS, LLC for further information.
NOTE
C – ACQUISITION OF TCBM HOLDINGS, LLC
On
November 30, 2019, the Company acquired 100% ownership of TCBM Holdings, LLC (“TCBM”) and TCBM’s two wholly
owned subsidiaries, HMNRTH, LLC and 911 Help Now, LLC. The combination has been accounted for in the accompanying consolidated
financial statements as an “acquisition” transaction. Accordingly, the financial position and results of operation
of the Company prior to November 30, 2019 has been excluded from the accompanying consolidated financial statements. The Company
acquired a 100% interest in exchange for a Convertible Promissory Note in the amount of $2,000,000.
Details
regarding the book values and fair values of the net assets acquired are as follows:
|
|
Book
Value
|
|
|
Fair
Value
|
|
|
Difference
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
546,411
|
|
|
$
|
546,411
|
|
|
$
|
-
|
|
Inventory
|
|
|
70,580
|
|
|
|
70,580
|
|
|
|
-
|
|
Property
and Equipment
|
|
|
36,363
|
|
|
|
36,363
|
|
|
|
-
|
|
Total
|
|
$
|
653,354
|
|
|
$
|
653,354
|
|
|
$
|
-
|
|
Goodwill
and Intangibles
Goodwill
is recorded when the cost of acquired businesses exceeds the fair value of the identifiable net assets acquired. Intangible assets
other than goodwill are recorded at fair value at the time acquired or at cost, if applicable. Intangible assets that do not have
indefinite lives are amortized in line with the pattern in which the economic benefits of the intangible asset are consumed. If
the pattern of economic benefit cannot be reliably determined, the intangible assets are amortized on a straight-line basis over
the shorter of the legal or estimated life. Goodwill and indefinite-lived intangibles assets are not amortized but are tested
for impairment in the fourth quarter using the same dates each year or more frequently if changes in circumstances or the occurrence
of events indicate potential impairment.
In
performing the annual impairment test, the fair value of each indefinite-lived intangible asset is compared to its carrying value
and an impairment charge is recorded if the carrying value exceeds the fair value. For goodwill, the Company first assesses qualitative
factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount,
and whether it is necessary to perform the quantitative goodwill impairment test. The quantitative test is required only if the
Company concludes that it is more-likely-than-not that a reporting unit’s fair value is less than its carrying amount. For
quantitative testing, the Company compares the fair value of each reporting unit with its carrying amount. If the carrying amount
exceeds the fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s
fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
Fair
values are determined using established business valuation techniques and models developed by the Company, estimates of market
participant assumptions of future cash flows, future growth rates and discount rates to value estimated cash flows. Changes in
economic and operating conditions, actual growth below the assumed market participant assumptions or an increase in the discount
rate could result in an impairment charge in a future period.
Acquisitions
Upon
acquisition of a business, the Company uses the income, market or cost approach (or a combination thereof) for the valuation as
appropriate. The valuation inputs in these models and analyses are based on market participant assumptions. Market participants
are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or
liability.
Fair
value estimates are based on a series of judgments about future events and uncertainties and rely heavily on estimates and assumptions.
Management values property, plant and equipment using the cost approach supported where available by observable market data, which
includes consideration of obsolescence. Management values acquired intangible assets using the relief from royalty method or excess
earnings method, forms of the income approach supported by observable market data for peer companies. The significant assumptions
used to estimate the value of the acquired intangible assets include discount rates and certain assumptions that form the basis
of future cash flows (such as revenue growth rates, customer attrition rates, and royalty rates). Acquired inventories are marked
to fair value for valuation of the total purchase price. For certain items, the carrying value is determined to be a reasonable
approximation of fair value based on information available to the Company.
Assets
acquired
|
|
As
of
November
30,
2019
|
|
|
|
|
|
Cash
|
|
$
|
546,411
|
|
Inventory
(i)
|
|
|
70,580
|
|
Property,
plant and equipment (ii)
|
|
|
36,363
|
|
|
|
|
653,354
|
|
Goodwill
(iii)
|
|
|
1,346,646
|
|
Total purchase
price
|
|
$
|
2,000,000
|
|
(i)
|
Inventories
acquired were sold on March 11, 2020
|
(ii)
|
Property,
plant and equipment acquired includes computers, software and other office equipment.
|
(iii)
|
Goodwill
is recorded when the cost of acquired businesses exceeds the fair value of the identifiable net assets acquired.
|
The
changes in the carrying amount of goodwill for the period from November 30, 2019 through June 30, 2020 were as follows:
|
|
|
|
Balance
as of November 30, 2019
|
|
$
|
1,346,646
|
|
Additions
and adjustments
|
|
|
-
|
|
Balance as
of June 30, 2020
|
|
$
|
1,346,646
|
|
NOTE
D - PROPERTY AND EQUIPMENT
|
|
06/30/2020
|
|
|
06/30/2019
|
|
|
|
|
|
|
|
|
Property
and Equipment (i)
|
|
$
|
36,363
|
|
|
$
|
-
|
|
Less: accumulated
depreciation (ii)
|
|
|
(3,030
|
)
|
|
|
|
|
Total
|
|
$
|
33,333
|
|
|
$
|
-
|
|
|
(i)
|
Property
and equipment are stated at cost and depreciated principally on methods and at rates
designed to amortize their costs over their useful lives.
|
|
(ii)
|
Depreciation
expense for the years ended June 30, 2020 and 2019 was $3,030 and $-, respectively.
|
NOTE
E – ACCRUED OFFICER AND DIRECTOR COMPENSATION
Accrued
officer and director compensation is due to Wayne Anderson, the sole officer and director of the Company, and consists of:
|
|
06/30/2020
|
|
|
06/30/2019
|
|
|
|
|
|
|
|
|
Pursuant
to January 26, 2018 Board of Directors Service Agreement
|
|
$
|
79,803
|
|
|
$
|
39,803
|
|
Total
|
|
$
|
79,803
|
|
|
$
|
39,803
|
|
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
E – ACCRUED OFFICER AND DIRECTOR COMPENSATION (cont’d)
For
the years ended June 30, 2020 and 2019, the balance of accrued officer and director compensation changed as follows:
|
|
Pursuant
to
Employment
Agreements
|
|
|
Pursuant
to
Board of
Directors
Services
Agreements
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June
30, 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Officer’s/director’s
compensation for year ended June 30, 2019 (including stock-based compensation of $40,000 accrued as Stock to be Issued)
|
|
|
-
|
|
|
|
39,803
|
|
|
|
39,803
|
|
Balance June
30, 2019
|
|
|
-
|
|
|
|
39,803
|
|
|
|
39,803
|
|
Officer’s/director’s
compensation for the year ended June 30, 2020 (including stock-based compensation of $40,000 accrued as Stock
to be Issued)
|
|
|
-
|
|
|
|
40,000
|
|
|
|
40,000
|
|
Balances
at June 30, 2020
|
|
$
|
-
|
|
|
$
|
79,803
|
|
|
$
|
79,803
|
|
|
(i)
|
As
of June 30, 2020 and June 30, 2019, total shares of common stock accrued as “Stock
to be Issued” to Mr. Anderson as per the terms of the Board of Director’s
Services Agreement is 100,000 and 60,000, respectively.
|
NOTE
F - NOTES PAYABLE, THIRD PARTIES
Notes
payable to third parties consist of:
|
|
June
30, 2020
|
|
|
June
30, 2019
|
|
|
|
|
|
|
|
|
Convertible
Promissory Note dated January 24, 2018 payable to Tri-Bridge Ventures, LLC (“Tri-Bridge”), interest at 10%, due
January 24, 2019-less unamortized debt discount of $0 and $0 at June 30, 2020 and June 30, 2019, respectively
(i)
|
|
$
|
15,750
|
|
|
$
|
15,750
|
|
Convertible
Promissory Note dated February 16, 2018 payable to Tri-Bridge Ventures, LLC (“Tri-Bridge”), interest at 10%, due
February 16, 2019-less unamortized debt discount of $0 and $0 at June 30, 2020 and June 30, 2019, respectively
(ii)
|
|
|
8,000
|
|
|
|
8,000
|
|
Convertible
Promissory Note dated June 3, 2018 payable to Valvasone Trust (“Valvasone”), interest at 5%, default rate of
15%, due June 3, 2019-less unamortized debt discount of $0 and $0 at June 30, 2020 and June 30, 2019,
respectively (iii)
|
|
|
91,900
|
|
|
|
91,900
|
|
Convertible
Promissory Note dated June 29, 2018 payable to Jody A. DellaDonna (“JDD”), interest at 5%, default rate of
15%, due June 29, 2019-less unamortized debt discount of $0 and $0 at June 30, 2020 and June 30, 2019,
respectively (iv)
|
|
|
25,000
|
|
|
|
25,000
|
|
Convertible
Promissory Note dated November 30, 2019 payable to Jetco Holdings, LLC (“Jetco”), interest at 3%, due November
30, 2020-less unamortized debt discount of $433,199 and $0 at June 30, 2020 and June 30, 2019, respectively
(v)
|
|
|
688,177
|
|
|
|
-
|
|
Convertible
Promissory Note dated December 17, 2019 payable to Armada Investment Fund, LLC (“Armada”), interest at 8%, due
December 17, 2020-less unamortized debt discount of $5,998 and $0 at, June 30, 2020 and June 30, 2019,
respectively (vi)
|
|
|
5,002
|
|
|
|
-
|
|
Convertible
Promissory Note dated March 20, 2020 payable to Jetco Holdings, LLC (“Jetco”), interest at 3%, due March 20, 2021-less
unamortized debt discount of $14,411 and $0 at, June 30, 2020 and June 30, 2019, respectively (vii)
|
|
|
5,589
|
|
|
|
-
|
|
Totals
|
|
$
|
839,418
|
|
|
$
|
140,650
|
|
(i)
|
On
January 24, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to Tri-Bridge Ventures,
LLC in the principal amount of $15,750. The Convertible Note was fully funded on January 24, 2018. The Convertible Note is
convertible, in whole or in part, at any time and from time to time before maturity (January 24, 2019) at the option of the
holder. The Conversion Price shall be equal to Fifty Percent (50%) of the lowest Trading Price (defined below) during the
Valuation Period (defined below), and the Conversion Amount shall be the amount of principal or interest electively converted
in the Conversion Notice. The total number of shares due under any conversion notice (“Notice Shares”) will be
equal to the Conversion Amount divided by the Conversion Price. On the date that a Conversion Notice is delivered to Holder,
the Company shall deliver an estimated number of shares (“Estimated Shares”) to Holder’s brokerage account
equal to the Conversion Amount divided by 50% of the Market Price. “Market Price” shall mean the lowest of the
daily Trading Price for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day
prior to the Conversion Date. The “Valuation Period” shall mean twenty (20) Trading Days, commencing on the first
Trading Day following delivery and clearing of the Notice Shares in Holder’s brokerage account, as reported by Holder
(“Valuation Start Date”). If at any time, one or multiple times, during the Valuation Period the number of Estimated
Shares delivered to Holder is less than the Notice Shares, the company must immediately deliver enough shares equal to the
difference. A Conversion Amount will not be considered fully converted until the end of the Valuation Period for that Conversion
Amount. “Trading Price” means, for any security as of any date, any trading price on the OTC Bulletin Board, or
other applicable trading market (the “OTCBB”) as reported by a reliable reporting service (“Reporting Service”)
mutually acceptable to Maker and Holder (i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such security,
the price of such security on the principal securities exchange or trading market where such security is listed or traded.
“Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTCBB, or on the
principal securities The Convertible Note has a term of one (1) year and bears interest at 10% annually. As of June 30,
2020, $15,750 principal plus $3,829 interest were due.
|
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
(ii)
|
On
February 16, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to Tri-Bridge Ventures,
LLC in the principal amount of $8,000. The Convertible Note was fully funded on February 16, 2018. The Convertible Note is
convertible, in whole or in part, at any time and from time to time before maturity (February 16, 2019) at the option of the
holder at the Variable Conversion Price, which shall be equal to the lesser of (i) the price of any public offering of the
Maker’s Common Stock or (ii) Fifty Percent (50%) of the lowest Trading Price (defined below) during the Twenty Trading
Day period prior to the day the Holder delivers the Conversion Notice, and the Conversion Amount shall be the amount of principal
or interest electively converted in the Conversion Notice. “Trading Price” means, for any security as of any date,
any trading price on the OTC Bulletin Board, or other applicable trading market (the “OTCBB”) as reported by a
reliable reporting service (“Reporting Service”) mutually acceptable to Maker and Holder (i.e. Bloomberg) or,
if the OTCBB is not the principal trading market for such security, the price of such security on the principal securities
exchange or trading market where such security is listed or traded. “Trading Day” shall mean any day on which
the Common Stock is tradable for any period on the OTCBB, or on the principal securities exchange or other securities market
on which the Common Stock is then being traded. The Convertible Note has a term of one (1) year and bears interest at 10%
annually. As of June 30, 2020, $8,000 principal plus $1,894 interest were due.
|
|
|
(iii)
|
On
June 3, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to Valvasone Trust in the
principal amount of $91,900. The Convertible Note was issued for compensation due for consulting services. The Convertible
Note is convertible, in whole or in part, at any time and from time to time before maturity (June 3, 2019) at the option of
the holder at the conversion price which shall be equal to the lower of: (a) 50% of the lowest trading price of the Company’s
common stock during the 25 consecutive Trading Days prior to the date on which Holder elects to convert all or part of the
Note or (b) 50% of the lowest trading price of the Company’s common stock during the 25 consecutive Trading Days prior
to the Effective Date. The Convertible Note has a term of one (1) year and bears interest at 5% annually. As of June 30,
2020, $91,900 principal plus $16,814 interest were due.
|
|
|
(iv)
|
On
June 29, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to Jody A. DellaDonna
in the principal amount of $25,000. The Convertible Note was issued for compensation due for consulting services. The Convertible
Note is convertible, in whole or in part, at any time and from time to time before maturity (June 29, 2019) at the option
of the holder at the conversion price which shall be equal to the lower of: (a) 50% of the lowest trading price of the Company’s
common stock during the 25 consecutive Trading Days prior to the date on which Holder elects to convert all or part of the
Note or (b) 50% of the lowest trading price of the Company’s common stock during the 25 consecutive Trading Days prior
to the Effective Date. The Convertible Note has a term of one (1) year and bears interest at 5% annually. As of June 30,
2020, $25,000 principal plus $4,362 interest were due.
|
|
|
(v)
|
On
November 30, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to Jetco Holdings,
LLC in the principal amount of $2,000,000. The Convertible Note was Issued as part of the Purchase and Sale Agreement for
the acquisition of TCBM Holdings, LLC. The Convertible Note is convertible, in whole or in part, at any time and from time
to time before maturity (November 30, 2020) at the option of the holder. The conversion price for the principal and interest
in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing
a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price”
means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period
ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security
as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the
“OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder
(i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities
exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security
is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are
quoted on the OTC Markets. The Convertible Note has a term of one (1) year and bears interest at 3% annually. As of June
30, 2020, $1,121,376 principal plus $27,388 interest were due.
|
|
|
(vi)
|
On
December 17, 2019, the Company entered into a Securities Purchase Agreement (the “Agreement”)
with Armada Capital Partners, LLC (“Armada”) wherein the Company issued Armada
a Convertible Promissory Note (the “Convertible Note”) in the amount of $11,000
($1,000 OID). The Convertible Note has a term of one (1) year (due on December 17, 2020)
and bears interest at 8% annually. The Convertible Note is convertible, in whole or in
part, at any time and from time to time before maturity (March 20, 2021) at the option
of the holder. The conversion price for the principal and interest in connection with
voluntary conversions by the Holder shall be 60% multiplied by the Market Price (as defined
herein)(representing a discount rate of 40%), subject to adjustment as described herein
(“Conversion Price”). Market Price” means the lowest one (1)
Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading
Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading
Prices” means, for any security as of any date, the lowest traded price on the
Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”)
as reported by a reliable reporting service (“Reporting Service”) designated
by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market
for such security, on the principal securities exchange or trading market where such
security is listed or traded or, if the lowest intraday trading price of such security
is not available in any of the foregoing manners, the lowest intraday price of any market
makers for such security that are quoted on the OTC Markets. As part and parcel of the
foregoing transaction, Armada was issued a warrant granting the holder the right to purchase
up to 560,800 shares of the Company’s common stock at an exercise price of $0.024
for a term of 5-years. The transaction closed on December 17, 2019. In addition, 10,000,000
shares of the Company’s common stock have been reserved at Pacific Stock Transfer
Corporation for possible issuance upon the conversion of the Note into shares of our
common stock. As of June 30, 2020, $11,000 principal plus $472 interest
were due.
|
|
|
(vii)
|
On
March 20, 2020, the Company executed a Convertible Note (the “Convertible Note”) payable to Jetco Holdings, LLC
in the principal amount of $20,000. The Convertible Note is convertible, in whole or in part, at any time and from time to
time before maturity (March 20, 2021) at the option of the holder. The conversion price for the principal and interest in
connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing
a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price”
means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period
ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security
as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the
“OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder
(i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities
exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security
is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are
quoted on the OTC Markets. The Convertible Note has a term of one (1) year and bears interest at 3% annually. As of June
30, 2020, $20,000 principal plus $168 interest were due.
|
|
|
(viii)
|
As of the date of this filing, all notes payable
to third parties remain outstanding.
|
NOTE
G - NOTE PAYABLE, RELATED PARTY
Notes
payable to related parties consist of:
|
|
June
30, 2020
|
|
|
June
30, 2019
|
|
|
|
|
|
|
|
|
Unsecured
Convertible Promissory Notes dated July 27, 2018, payable to Around the Clock Partners,
LP (entity controlled by Wayne Anderson), interest at 5%, default rate of 15%,
due July 27, 2019- less unamortized debt discount of $0 and $8,890 at June
30, 2020 and June 30, 2019, respectively (i)
|
|
$
|
124,800
|
|
|
$
|
115,910
|
|
Total
|
|
$
|
124,800
|
|
|
$
|
115,910
|
|
(i)
|
On
July 27, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to Around the Clock Partners,
LP in the principal amount of $124,800. The Convertible Note was issued for compensation due for consulting services. The
Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (July 27, 2019) at
the option of the holder at the conversion price which shall be equal to the lower of: (a) 50% of the lowest trading price
of the Company’s common stock during the 25 consecutive Trading Days prior to the date on which Holder elects to convert
all or part of the Note or (b) 50% of the lowest trading price of the Company’s common stock during the 25 consecutive
Trading Days prior to the Effective Date. The Convertible Note has a term of one (1) year and bears interest at 5% annually.
As of June 30, 2020, $124,800 principal plus $20,583 interest were due.
|
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
H - DERIVATIVE LIABILITY
The
derivative liability at June 30, 2020 and June 30, 2019 consisted of:
|
|
June
30, 2020
|
|
|
June
30, 2019
|
|
|
|
|
|
|
|
|
Convertible
Promissory Notes payable to Tri-Bridge Ventures, LLC. Please see NOTE F – NOTES PAYABLE, THIRD PARTIES for further
information
|
|
$
|
213,933
|
|
|
$
|
173,500
|
|
Convertible
Promissory Note payable to Valvasone Trust. Please see NOTE F – NOTES PAYABLE, THIRD PARTIES for further information
|
|
|
150,619
|
|
|
|
229,750
|
|
Convertible
Promissory Notes payable to Jody A. DellaDonna. Please see NOTE F – NOTES PAYABLE, THIRD PARTIES for further
information
|
|
|
40,974
|
|
|
|
62,500
|
|
Convertible
Promissory Note payable to Around the Clock Partners, LP. Please see NOTE G – NOTES PAYABLE, RELATED PARTIES
for further information
|
|
|
204,540
|
|
|
|
249,600
|
|
Convertible
Promissory Notes payable to Jetco Holdings, LLC. Please see NOTE G – NOTES PAYABLE, RELATED PARTIES for further
information
|
|
|
800,452
|
|
|
|
-
|
|
Convertible
Promissory Note payable to Armada Investment Fund, LLC. Please see NOTE G – NOTES PAYABLE, RELATED PARTIES for
further information
|
|
|
9,877
|
|
|
|
-
|
|
Total
derivative liability
|
|
$
|
1,420,455
|
|
|
$
|
715,350
|
|
The
Convertible Promissory Notes (the “Notes”) contain a variable conversion feature based on the future trading price
of the Company’s common stock. Therefore, the number of shares of common stock issuable upon conversion of the Notes is
indeterminate. Accordingly, we have recorded the fair value of the embedded conversion features as a derivative liability at the
respective issuance dates of the notes and charged the applicable amounts to debt discounts (limited to the face value of the
respective notes) and the remainder to other expenses. The increase (decrease) in the fair value of the derivative liability from
the respective issue dates of the notes to the measurement dates is charged (credited) to other expense (income).
The
fair value of the derivative liability was measured at the respective issuance dates and at June 30, 2020, and June 30,
2019 using the Black Scholes option pricing model. Assumptions used for the calculation of the derivative liability of
the Notes at June 30, 2020 were (1) stock price of $0.0001 per share, (2) conversion prices ranging from $0.00001 to $0.00007
per share, (3) term of 6 months to 1 year, (4) expected volatility of 113.19% to 139.74%, and (5) risk free interest
rate of 0.16%. Assumptions used for the calculation of the derivative liability of the Notes at June 30, 2019 were (1)
stock price of $0.0001 per share, (2) conversion price of $0.00005 per share, (3) terms ranging from 1 month to 6 months, (4)
expected volatility of 1950.57%, and (5) risk free interest rates ranging from 2.09% to 2.18%.
The
following table provides a reconciliation of the beginning and ending balances for the convertible note embedded derivative liability
measured at fair value using significant unobservable inputs (Level 3):
|
|
Level 3
|
|
Balance at June 30, 2018
|
|
$
|
281,300
|
|
Additions
|
|
|
249,600
|
|
Loss
|
|
|
184,450
|
|
Balance at June 30, 2019
|
|
|
715,350
|
|
Additions
|
|
|
2,904,047
|
|
Gain
|
|
|
(2,190,052
|
)
|
Balance at June 30, 2020
|
|
$
|
1,420,455
|
|
NOTE
I - CAPITAL STOCK
Preferred
Stock
Filed
with the State of Delaware:
On
September 30, 1999, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated
Series A 8% Convertible Preferred Stock, par value $0.01. The designation of the new Series A 8% Convertible Preferred Stock was
approved by the Board of Directors on August 16, 1999. The Company is authorized to issue 3,000 shares of the Series A 8% Convertible
Preferred Stock. At June 30, 2020 and 2019, the Company had 0 and 0 shares issued and outstanding, respectively.
On
September 30, 1999, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated
Series B 8% Convertible Preferred Stock, par value $0.01. The designation of the new Series B 8% Convertible Preferred Stock was
approved by the Board of Directors on August 16, 1999. The Company is authorized to issue 3,000 shares of the Series B 8% Convertible
Preferred Stock. At June 30, 2020 and 2019, the Company had 0 and 0 shares issued and outstanding, respectively.
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
I - CAPITAL STOCK (cont’d)
On
February 15, 2000, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated
Series C 5% Convertible Preferred Stock, par value $0.01. The designation of the new Series C 5% Convertible Preferred Stock was
approved by the Board of Directors on February 14, 2000. The Company is authorized to issue 1,000 shares of the Series C 5% Convertible
Preferred Stock. At June 30, 2020 and 2019, the Company had 0 and 0 shares issued and outstanding, respectively.
On
April 26, 2001, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series
D Convertible Preferred Stock, par value $0.01. The designation of the new Series D Convertible Preferred Stock was approved by
the Board of Directors on April 26, 2001. The Company is authorized to issue 800 shares of the Series D Convertible Preferred
Stock. At June 30, 2020 and 2019, the Company had 0 and 0 shares issued and outstanding, respectively.
On
June 28, 2001, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series
E 8% Convertible Preferred Stock, par value $0.01. The designation of the new Series E 8% Convertible Preferred Stock was approved
by the Board of Directors on March 30, 2001. The Company is authorized to issue 250 shares of the Series E Convertible Preferred
Stock. At June 30, 2020 and 2019, the Company had 0 and 0 shares issued and outstanding, respectively.
Series
K Super Voting Preferred Stock
On
July 31, 2019, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series
K Super Voting Preferred Stock, par value $0.01. The designation of the new Series K Super Voting Preferred Stock was approved
by the Board of Directors on July 16, 2019. The Company is authorized to issue three (3) shares of the Series K Super Voting Preferred
Stock. At June 30, 2020 and 2019, the Company had 3 and 0 shares issued and outstanding, respectively.
Dividends.
Initially, there will be no dividends due or payable on the Series K Super Voting Preferred Stock. Any future terms with respect
to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all
such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly
file or cause to be filed.
Liquidation
and Redemption Rights. Upon the occurrence of a Liquidation Event (as defined below), the holders of Series K Super Voting
Preferred Stock are entitled to receive net assets on a pro-rata basis. Each holder of Series K Super Voting Preferred Stock is
entitled to receive ratably any dividends declared by the Board, if any, out of funds legally available for the payment of dividends.
As used herein, “Liquidation Event” means (i) the liquidation, dissolution or winding-up, whether voluntary or involuntary,
of the Corporation, (ii) the purchase or redemption by the Corporation of shares of any class of stock or the merger or consolidation
of the Corporation with or into any other corporation or corporations, unless (a) the holders of the Series K Super Voting Preferred
Stock receive securities of the surviving Corporation having substantially similar rights as the Series K Super Voting Preferred
Stock and the stockholders of the Corporation immediately prior to such transaction are holders of at least a majority of the
voting securities of the successor Corporation immediately thereafter (the “Permitted Merger”), unless the holders
of the shares of Series K Super Voting Preferred Stock elect otherwise or (b) the sale, license or lease of all or substantially
all, or any material part of, the Corporation’s assets, unless the holders of Series K Super Voting Preferred Stock elect
otherwise.
Conversion.
No conversion of the Series K Super Voting Preferred Stock is permitted.
Rank.
All shares of the Series K Super Voting Preferred Stock shall rank (i) senior to the Corporation’s (A) Common Stock, par
value $0.0001 per share (“Common Stock”), and any other class or series of capital stock of the Corporation hereafter
created, except as otherwise provided in clauses (ii) and (iii) of this Section 4, (ii) pari passu with any class or series
of capital stock of the Corporation hereafter created and specifically ranking, by its terms, on par with the Series K Super Voting
Preferred-Stock and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking,
by its terms, senior to the Series K Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary.
Voting
Rights.
A.
If at least one share of Series K Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares
of Series K Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times
the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the
total number of shares of any and all Preferred stocks which are issued and outstanding at the time of voting.
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
I - CAPITAL STOCK (cont’d)
B.
Each individual share of Series K Super Voting Preferred Stock shall have the voting rights equal to:
[twenty
times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all shares of any other Preferred
stocks issued and outstanding at the time of voting}]
Divided
by:
[the
number of shares of Series K Super Voting Preferred Stock issued and outstanding at the time of voting]
With
respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the
holders of the outstanding shares of Series K Super Voting Preferred Stock shall vote together with the holders of Common Stock
without regard to class, except as to those matters on which separate class voting is required by applicable law or the Certificate
of Incorporation or By-laws.
Series
L Preferred Stock
On
July 31, 2019, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series
L Preferred Stock, par value $0.01. The designation of the new Series L Preferred Stock was approved by the Board of Directors
on July 16, 2019. The Company is authorized to issue five hundred thousand (500,000) shares of the Series L Preferred Stock. At
June 30, 2020 and 2019, the Company had 10 and 0 shares issued and outstanding, respectively.
Dividends.
The holders of Series L Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors,
in its sole discretion.
Voting.
a.
If at least one share of Series L Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series
L Preferred Stock at any given time, regardless of their number, shall have voting rights equal to four times the sum of: i) the
total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii) the total number of shares
of all series of Preferred Stock which are issued and outstanding at the time of voting.
b.
Each individual share of Series L Preferred Stock shall have the voting rights equal to:
[four
times the sum of: {all shares of Common Stock issued and outstanding at time of voting + the total number of shares of all series
of Preferred Stock issued and outstanding at time of voting}]
divided
by:
[the
number of shares of Series L Preferred Stock issued and outstanding at the time of voting]
Conversion
Rights.
a)
Outstanding. If at least one share of Series L Preferred Stock is issued and outstanding, then the total aggregate issued
shares of Series L Preferred Stock at any given time, regardless of their number, shall be convertible into the number of shares
of Common Stock defined by the formula set forth is section 4.b.
b)
Method of Conversion.
i.
Procedure- Before any holder of Series L Preferred Stock shall be entitled to convert the same into shares of common stock, such
holder shall surrender the certificate or certificates therefore, duly endorsed, at the office of the Company or of any transfer
agent for the Series L Preferred Stock, and shall give written notice 5 business days prior to date of conversion to the Company
at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the
certificate or certificates for shares of common stock are to be issued. The Company shall, within five business days, issue and
deliver at such office to such holder of Series L Preferred Stock, or to the nominee or nominees of such holder, a certificate
or certificates for the number of shares of common stock to which such holder shall be entitled as aforesaid. Conversion shall
be deemed to have been effected on the date when delivery of notice of an election to convert and certificates for shares is made,
and such date is referred to herein as the “Conversion Date.”
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
I - CAPITAL STOCK (cont’d)
ii.
Issuance- Shares of Series L Preferred Stock may only be issued in exchange for the partial or full retirement of debt held by
Management, Employees, Consultants or as directed by a majority vote of the Board of Directors. The number of Shares of Series
L Preferred Stock to be issued to each qualified person (member of Management, Employee or Consultant) holding a Note shall be
determined by the following formula:
For
retirement of debt: One (1) share of Series L Preferred stock shall be issued for each Five Thousand Dollar ($5,000) tranche of
outstanding liability. As an example: If an officer has accrued wages due to him or her in the amount of $25,000, the officer
can elect to accept 5 shares of Series L Preferred stock to satisfy the outstanding obligation of the Company.
iii.
Calculation for conversion into Common Stock- Each individual share of Series L Preferred Stock shall be convertible into the
number of shares of Common Stock equal to:
[5000]
divided
by:
[.50
times the lowest closing price of the Company’s common stock for the immediate five-day period prior to the receipt of the
Notice of Conversion remitted to the Company by the Series L Preferred stockholder]
Common
Stock
Class
A and Class B:
Identical
Rights. Except as otherwise expressly provided in ARTICLE FIVE of the Company’s Amended and Restated Certificate of
Incorporation dated August 13, 1999, all Common Shares shall be identical and shall entitle the holders thereof to the same rights
and privileges.
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
I - CAPITAL STOCK (cont’d)
Stock
Splits. The Corporation shall not in any manner subdivide (by any stock split, reclassification, stock dividend, recapitalization,
or otherwise) or combine the outstanding shares of one class of Common Shares unless the outstanding shares of all classes of
Common Shares shall be proportionately subdivided or combined.
Liquidation
Rights. Upon any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Corporation, after
payment shall have been made to holders of outstanding Preferred Shares, if any, of the full amount to which they are entitled
pursuant to the Certificate of Incorporation, the holders of Common Shares shall be entitled, to the exclusion of the holders
of the Preferred Shares, if any, to share ratably, in accordance with the number of Common Shares held by each such holder, in
all remaining assets of the Corporation available for distribution among the holders of Common Shares, whether such assets are
capital, surplus, or earnings. For the purposes of this paragraph, neither the consolidation or merger of the Corporation with
or into any other corporation or corporations in which the stockholders of the Corporation receive capital stock and/or securities
(including debt securities) of the acquiring corporation (or of the direct or indirect parent corporation of the acquiring corporation)
nor the sale, lease or transfer of the Corporation, shall be deemed to be a voluntary or involuntary liquidation, dissolution,
or winding up of the Corporation as those terms are used in this paragraph.
Voting
Rights.
(a)
The holders of the Class A Shares and the Class B Shares shall vote as a single class on all matters submitted to a vote of the
stockholders, with each Class A Share being entitled to one (1) vote and each Class B Share being entitled to six (6) votes, except
as otherwise provided by law.
(b)
The holders of Class A Shares and Class B Shares are not entitled to cumulative votes in the election of any directors.
Preemptive
or Subscription Rights. No holder of Common Shares shall be entitled to preemptive or subscription rights.
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
I - CAPITAL STOCK (cont’d)
Conversion
Rights.
(a)
Automatic Conversion. Each Class B Share shall (subject to receipt of any and all necessary approvals) convert automatically into
one fully paid and non-assessable Class A Share (i) upon its sale, gift, or other transfer to a party other than a Principal Stockholder
(as defined below) or an Affiliate of a Principal Stockholder (as defined below), (ii) upon the death of the Class B Stockholder
holding such Class B Share, unless the Class B Shares are transferred by operation of law to a Principal Stockholder or an Affiliate
of a Principal Stockholder, or (iii) in the event of a sale, gift, or other transfer of a Class B Share to an Affiliate of a Principal
Stockholder, upon the death of the transferor. Each of the foregoing automatic conversion events shall be referred to hereinafter
as an “Event of Automatic Conversion.” For purposes of this ARTICLE FIVE, “Principal Stockholder” includes
any of Donald H. Goldman, Steven M. Fieldman, Lance Fieldman, Yuri Itkis, Michall Itkis and Boris Itkis and an “Affiliate
of a Principal Stockholder” is a person that directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified. For purposes of this definition, “control,”
when used with respect to any specified person, means the power to direct or cause the direction of the management, and policies
of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. Without
limitation, an Affiliate also includes the estate of such individual.
(b)
Voluntary Conversion. Each Class B Share shall be convertible at the option of the holder, for no additional consideration, into
one fully paid and non-assessable Class A Share at any time.
(c)
Conversion Procedure. Promptly upon the occurrence of an Event of Automatic Conversion such that Class B shares are converted
automatically into Class A Shares, or upon the voluntary conversion by the holder, the holder of such shares shall surrender the
certificate or certificates therefor, duly endorsed in blank or accompanied by proper instruments of transfer, at the office of
the Corporation or of any transfer agent for the Class A Shares, and shall give written notice to the Corporation at such office
(i) stating that the shares are being converted pursuant to an Event of Automatic Conversion into Class A Shares as provided in
subparagraph 5.6(a) hereof or a voluntary conversion as provided in subparagraph 5.6(b) hereof, (ii) specifying the Event of Automatic
Conversion (and, if the occurrence of such event is within the control of the transferor, stating the transferor’s intent
to effect an Event of Automatic Conversion) or whether such conversion is voluntary, (iii) identifying the number of Class B Shares
being converted, and (iv) setting out the name or names (with addresses) and denominations in which the certificate or certificates
for Class A Shares shall be issued and including instructions for delivery thereof. Delivery of such notice together with the
certificates representing the Class B Shares shall obligate the Corporation to issue such Class A Shares and the Corporation shall
be justified in relying upon the information and the certification contained in such notice and shall not be liable for the result
of any inaccuracy with respect thereto. Thereupon, the Corporation or its transfer agent shall promptly issue and deliver at such
stated address to such holder or to the transferee of Class B Shares a certificate or certificates for the number of Class A Shares
to which such holder or transferee is entitled, registered in the name of such holder, the designee of such holder or transferee,
as specified in such notice. To the extent permitted by law, conversion pursuant to (i) an Event of Automatic Conversion shall
be deemed to have been effected as of the date on which the Event of Automatic Conversion occurred or (ii) a voluntary conversion
shall be deemed to have been effected as of the date the Corporation receives the written notice pursuant to this subparagraph
(c) (each date being the “Conversion Date”). The person entitled to receive the Class A Shares issuable upon such
conversion shall be treated for all purposes as the record holder of such Class A Shares at and as of the Conversion Date, and
the right of such person as the holder of Class B Shares shall cease and terminate at and as of the Conversion Date, in each case
without regard to any failure by the holder to deliver the certificates or the notice by this subparagraph (c).
(d)
Unconverted Shares. In the event of the conversion of fewer than all of the Class B Shares evidenced by a certificate surrendered
to the Corporation in accordance with the procedures of this Paragraph 5.6, the Corporation shall execute and deliver to or upon
the written order of the holder of such certificate, without charge to such holder, a new certificate evidencing the number of
Class B Shares not converted.
(e)
Reissue of Shares. Class B Shares that are converted into Class A Shares as provided herein shall be retired and canceled and
shall not be reissued.
(f)
Reservation. The Corporation hereby reserves and shall at all times reserve and keep available, out of its authorized and unissued
Class A Shares, for the purpose of effecting conversions, such number of duly authorized Class A Shares as shall from time to
time be sufficient to effect the conversion of all outstanding Class B Shares. The Corporation covenants that all the Class A
Shares so issuable shall, when so issued, be duly and validly issued, fully paid and non-assessable, and free from liens and charges
with respect to the issue. The Corporation will take all such action as may be necessary to assure that all such Class A Shares
may be so issued without violation of any applicable law or regulation, or any of the requirements of any national securities
exchange upon which the Class A Shares may be listed. The Corporation will not take any action that results in any adjustment
of the conversion ratio if the total number of Class A Shares issued and issuable after such action upon conversion of the Class
B Shares would exceed the total number of Class A Shares then authorized by the Amended and Restated Certificate of Incorporation,
as amended.
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
I - CAPITAL STOCK (cont’d)
At
June 30, 2020 and 2019, the Company is authorized to issue 14,991,000,000 and 14,991,000,000 shares of Class A Common
Stock, respectively. At June 30, 2020 and 2019, the Company has 12,189,293,609 and 12,189,293,609 shares issued
and outstanding, respectively. At June 30, 2020 and 2019, the Company is authorized to issue 4,000,000 and 4,000,000
shares of Class B Common Stock, respectively. At June 30, 2020 and 2019, the Company has 0 and 0 shares issued and
outstanding, respectively.
Common
Stock, Preferred Stock and Warrant Issuances
For
the twelve months ended June 30, 2020 and June 30, 2019, the Company issued and/or sold the following unregistered
securities:
Common
Stock:
2020
None
2019
None
Preferred
Stock:
On
August 2, 2019, the Company issued three (3) shares of its Series K Super Voting Preferred Stock to its sole officer and director,
Jimmy Wayne Anderson.
On
September 2, 2019, the Company issued ten (10) shares of its Series L Preferred Stock to Sylios Corp, an entity controlled by
the Company’s sole officer and director.
Warrants
and Options:
On
December 17, 2019, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Armada Capital
Partners, LLC (“Armada”) wherein the Company issued Armada a Convertible Promissory Note (the “Note”)
in the amount of $11,000 ($1,000 OID). The Note has a term of one (1) year (due on December 17, 2020) and bears interest at 8%
annually. As part and parcel of the foregoing transaction, Armada was issued a warrant granting the holder the right to purchase
up to 560,800 shares of the Company’s common stock at an exercise price of $0.024 for a term of 5-years. The transaction
closed on December 17, 2019. Please see NOTE F - NOTES PAYABLE, THIRD PARTIES for further information.
NOTE
J - INCOME TAXES
The
Company accounts for income taxes using the asset and liability method described in SFAS No. 109, “Accounting For Income
Taxes”, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between
the financial reporting and the tax basis of the Company’s assets and liabilities at the enacted tax rates expected to be
in effect when such amounts are realized or settled. A valuation allowance related to deferred tax assets is recorded when it
is more likely than not that some portion or all of the deferred tax assets will not be realized. In recognition of the uncertainty
regarding the ultimate amount of income tax benefits to be derived, the Company has recorded a full valuation allowance at June
30, 2020 and 2019.
The
provision (benefit) for income taxes includes income taxes currently payable and those deferred because of temporary differences
between the financial statement and tax bases of assets and liabilities.
Significant
components of the Company’s deferred tax assets and liabilities are calculated at an estimated effective tax rate of 21%.
(35% for tax year 2017)
The
provision for (benefit from) income taxes differs from the amount computed by applying the statutory United States federal income
tax rate for the periods presented to income (loss) before income taxes. The income tax rate was 21% for the year ended June 30,
2020 and 2019. The sources of the difference are as follows:
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
J - INCOME TAXES (cont’d)
|
|
Year
Ended
|
|
|
|
June
30, 2020
|
|
|
June
30, 2019
|
|
Expected
tax at 21% and 21%, respectively
|
|
$
|
(115,698
|
)
|
|
$
|
(161,718
|
)
|
Non-deductible
stock-based compensation
|
|
|
21,000
|
|
|
|
8,400
|
|
Non-deductible
loss (nontaxable income) from derivative liability
|
|
|
(276,571
|
)
|
|
|
64,943
|
|
Non-deductible
amortization of debt discounts
|
|
|
331,252
|
|
|
|
50,228
|
|
Increase
(decrease) in Valuation allowance
|
|
|
40,017
|
|
|
|
38,147
|
|
Provision
for (benefit from) income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
(a)
|
As
a result of the Tax Cuts and Jobs Act enacted on December 22, 2017, the United States corporate income tax rate is 21% effective
January 1, 2018.
|
All
tax years remain subject to examination by the Internal Revenue Service.
Significant
components of the Company’s deferred income tax are as follows:
|
|
June
30, 2020
|
|
|
June
30, 2019
|
|
Unpaid
accrued officer and director compensation
|
|
$
|
16,759
|
|
|
$
|
8,359
|
|
Net
operating loss carry-forwards
|
|
|
29,383,089
|
|
|
|
29,329,836
|
|
Valuation
allowance
|
|
|
(29,399,848
|
)
|
|
|
(29,338,195
|
)
|
Net
non-current deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Based
on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax
asset of $29,366,076 attributable to the future utilization of the $16,759 timing difference relating to unpaid
officer and director compensation and the $29,366,076 net operating loss carryforward as of June 30, 2020 will be
realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements at
June 30, 2020. The Company will continue to review this valuation allowance and make adjustments as appropriate. $28,980,000
of the net operating loss carryforward expires in the year 2022.
Current
tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership
occurs. Therefore, the amount available to offset future taxable income may be limited.
NOTE
K - COMMITMENTS AND CONTINGENCIES
Occupancy
Currently,
the Company shares office space with Sylios Corp at 501 1st Ave N., Suite 901, St. Petersburg, FL 33701 and is not
required to reimburse Sylios Corp for monthly rent. The Company anticipates that this relationship will change with the additional
employees and it will be required to enter into a lease for a separate office space.
Employment
and Director Agreements
On
January 26, 2018, the Company executed a new Board of Directors Service Agreement with Jimmy Wayne Anderson. Under the terms of
the Agreement, commencing the first calendar quarter of 2018 the Company is to pay Mr. Anderson $10,000 per quarter for which
Mr. Anderson serves on the Board of Directors. In addition to cash compensation, the Company is to issue Mr. Anderson the equivalent
of $10,000 of the Company’s common stock on the last calendar day of each quarter. The calculation for the number of shares
to be issued to Mr. Anderson shall be as follows: $10,000/(Closing stock price on the last trading day of each quarter x .80).
Please see NOTE E – ACCRUED OFFICER AND DIRECTOR COMPENSATION for further information.
NOTE
L - GOING CONCERN UNCERTAINTY
Under
ASC 205-40, we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability
to meet our future financial obligations as they become due within one year after the date that the financial statements are issued.
As required by this standard, our evaluation shall initially not take into consideration the potential mitigating effects of our
plans that have not been fully implemented as of the date the financial statements are issued.
In
performing the first step of this assessment, we concluded that the following conditions raise substantial doubt about our ability
to meet our financial obligations as they become due. We have a history of net losses: As of June 30, 2020 and June 30,
2019, we had an accumulated deficit of $160,937,361 and $160,386,420, respectively. For the year ended June 30,
2020 and June 30, 2019, we had cash used in operating activities of $176,789 and $-, respectively. We expect
to continue to incur negative cash flows until such time as our operating segments generate sufficient cash inflows to finance
our operations and debt service requirements.
In
performing the second step of this assessment, we are required to evaluate whether our plans to mitigate the conditions above
alleviate the substantial doubt about our ability to meet our obligations as they become due within one year after the date that
the financial statements are issued. Our future plans include securing additional funding sources that may include establishing
corporate partnerships, establishing licensing revenue agreements, issuing additional convertible debentures and issuing public
or private equity securities, including selling common stock through an at-the-market facility (ATM).
There
is no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds
will be available through external sources. The lack of additional capital resulting from the inability to generate cash flow
from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations
and would, therefore, have a material effect on the business. Furthermore, there can be no assurance that any such required funds,
if available, will be available on attractive terms or they will not have a significant dilutive effect on the Company’s
existing shareholders. We have therefore concluded there is substantial doubt about our ability to continue as a going concern
through September 2021.
GLOBAL
TECHNOLOGIES, LTD
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended June 30, 2020 and 2019
NOTE
L - GOING CONCERN UNCERTAINTY (cont’d)
The
accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from our failure to continue as a going concern.
NOTE
M - SUBSEQUENT EVENTS
On
September 3, 2020, the Company entered into a Commitment to be Bound by the Amended Operating Agreement to Effect Transfer of
Membership Interest in order to facilitate the transfer of 25 Membership Units (the “Units”) issued by Global Clean
Solutions, LLC (“Global”) and held in the name of Graphene Holdings, LLC (“Graphene”) to the Company.
In exchange for the transfer of the Units to the Company, the Company issued to Graphene a Convertible Promissory Note (the “Note”)
in the amount of $250,000. The Note has a term of 6 months, is due on March 3, 2021 and accrues interest at 3% per annum. The
Note is convertible, in whole or in part, at any time and from time to time before maturity (March 3, 2021) at the option of the
Holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70%
multiplied by the Market Price (representing a discount rate of 30%), The transaction closed on September 9, 2020.
At
any time after the Closing Date, until the Note is no longer outstanding, the Note shall be convertible, in whole or in part,
into shares of Common Stock at the option of the Holder. The conversion price for the principal and interest in connection with
voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate
of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest
one (1) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion
Date.
On
September 9, 2020, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Graphene Holdings,
LLC (the “Investor”) wherein the Company issued the Investor a Convertible Promissory Note (the “Note”)
in the amount of $20,000. The Note has a term of six (6) months, is due on March 9, 2021 and accrues interest at 3% per annum.
The Note is convertible, in whole or in part, at any time and from time to time before maturity (March 9, 2021) at the option
of the Holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall
be 70% multiplied by the Market Price (representing a discount rate of 30%), The transaction closed on September 17, 2020.
On
September 22, 2020, the Company issued 596,785,387 shares of restricted common stock with a fair market value of $59,679 to a
noteholder for $29,839 in penalties against the note dated January 24, 2018.
On
November 5, 2020, the Company, through its wholly owned subsidiary Markets on Main, LLC (“Licensor”), entered into
a Platform License Agreement (the “License Agreement”) with Honey Badger Media, LLC (the “Licensee”).
Under the terms of the License Agreement, the Company grants the Licensee a perpetual, non-exclusive license to operate the Platform,
fulfillment opportunities and its related technologies. In consideration for the License,
the Licensee shall pay to the Licensor a fee equal to twenty percent (20%) of the Net Profits generated from Licensee’s
clients through the Platform.