UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_______________________
FORM
10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended September 30, 2012
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
THE TRANSITION FROM ______ TO ______.
Commission
File Number: 0-54557
_______________________
GLOBAL
EQUITY INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
|
27-3986073
|
(State or other Jurisdiction of Incorporation
or Organization)
|
|
(I.R.S.
Employer
Identification No.)
|
Al
Habtoor Business Tower
Level
28, P.O. Box 29805
Dubai
Marina, Dubai, UA
|
|
|
(Address of principal executive offices)
|
|
(Zip code)
|
Registrant’s
telephone number: +971 (7) 204 7593
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
[X]
No
[ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on its Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
|
[ ]
|
|
Accelerated
filer
|
[ ]
|
Non-accelerated
filer
|
[ ]
|
|
Smaller
reporting company
|
[X]
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ]
No [X]
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate
by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed by a court. Yes
[ ]
No
[ ]
APPLICABLE
ONLY TO CORPORATE ISSUERS
State
the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As
of November 16, 2012, there were 29,325,700 outstanding shares of the Registrant’s Common Stock, $.001 par value.
INDEX
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Page
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PART
I – FINANCIAL INFORMATION
|
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3
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Item
1. Financial Statements
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3
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Notes
to Financial Statements (Unaudited)
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F-4
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Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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5
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Item
3. Quantitative and Qualitative Disclosures about Market Risk
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9
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Item
4. Controls and Procedure
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9
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PART
II – OTHER INFORMATION
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11
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Item
1. Legal Proceedings
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11
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Item
1A. Risk Factors
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11
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Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
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11
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Item
3. Defaults Upon Senior Securities
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11
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Item
4. Mine Safety Disclosure
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11
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Item
5. Other Information
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11
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Item
6. Exhibits
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11
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SIGNATURES
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13
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PART
I – FINANCIAL INFORMATION
Item
1. Financial Statements.
Global
Equity International, Inc. and Subsidiary
Financial
Statements
September
30, 2012
(Unaudited)
CONTENTS
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Page(s)
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|
Consolidated
Balance Sheets as of September 30, 2012 (unaudited) and December 31, 2011
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F-1
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Consolidated
Statements of Operations and Comprehensive Loss Three and Nine Months Ended September 30, 2012 and September 30, 2011 (unaudited)
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F-2
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Consolidated
Statements of Cash Flows Nine Months Ended September 30, 2012 and September 30, 2011 (unaudited)
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F-3
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Notes
to Consolidated Financial Statements (unaudited)
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F-4
- F-
17
|
Global
Equity International, Inc. and Subsidiary
Consolidated
Balance Sheets
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|
September
30, 2012
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December
31, 2011
|
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|
|
Unaudited
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
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|
|
|
|
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Current
Assets
|
|
|
|
|
|
|
|
|
Cash
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|
$
|
31,526
|
|
|
$
|
2,218
|
|
Accounts
receivable
|
|
|
30,020
|
|
|
|
35,000
|
|
Prepaids
|
|
|
1,919
|
|
|
|
551
|
|
Total
Current Assets
|
|
|
63,465
|
|
|
|
37,769
|
|
|
|
|
|
|
|
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Marketable
Securities
|
|
|
160,000
|
|
|
|
1,690,000
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
223,465
|
|
|
$
|
1,727,769
|
|
|
|
|
|
|
|
|
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|
Liabilities,
Redeemable Preferred Stock and Stockholders’ Equity (Deficit)
|
|
|
|
|
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|
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|
|
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Current
Liabilities
|
|
|
|
|
|
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|
Accounts
payable
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|
$
|
26,300
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|
|
$
|
37,191
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|
Accounts
payable - Related parties
|
|
|
346,833
|
|
|
|
145,528
|
|
Loans payable
- Related party
|
|
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26,975
|
|
|
|
40,173
|
|
Total
Current Liabilities
|
|
|
400,108
|
|
|
|
222,892
|
|
|
|
|
|
|
|
|
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Redeemable
Series A, Convertible Preferred Stock: 5,000,000 shares authorized and 1,533,332 shares issued and outstanding, respectively,
$0.001 par value (redemption amount $480,000) (liquidation preference of $0)
|
|
|
480,000
|
|
|
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480,000
|
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|
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Stockholders’
Equity / (Deficit)
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|
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Common Stock:
70,000,000 shares authorized; 29,325,700 and 28,780,700 shares issued and outstanding, respectively, $0.001 par value
|
|
|
29,326
|
|
|
|
28,781
|
|
Additional
Paid In Capital
|
|
|
672,026
|
|
|
|
393,103
|
|
Accumulated
deficit
|
|
|
(1,357,197
|
)
|
|
|
(12,007
|
)
|
Accumulated
other comprehensive loss
|
|
|
(798
|
)
|
|
|
615,000
|
|
Total
Stockholders’ Equity (Deficit)
|
|
|
(656,643
|
)
|
|
|
1,024,877
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities, Redeemable Preferred Stock & Stockholders’ Equity (Deficit)
|
|
$
|
223,465
|
|
|
$
|
1,727,769
|
|
See
accompanying notes to financial statements.
Global
Equity International, Inc. and Subsidiary
Consolidated
Statements of Operations and Comprehensive Loss
Three
and Nine Months ended September 30, 2012 & September 30, 2011 (Unaudited)
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
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September 30, 2012
|
|
|
September 30, 2011
|
|
|
|
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Revenue
|
|
$
|
16,500
|
|
|
$
|
73,960
|
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$
|
409,000
|
|
|
$
|
96,541
|
|
|
|
|
|
|
|
|
|
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|
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General and administrative expenses
|
|
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231,354
|
|
|
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80,580
|
|
|
|
702,610
|
|
|
|
218,684
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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Net loss from operations
|
|
|
(214,854
|
)
|
|
|
(6,620
|
)
|
|
|
(293,610
|
)
|
|
|
(122,143
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Other income / (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense) and income
|
|
|
(2,444
|
)
|
|
|
(500
|
)
|
|
|
(76,968
|
)
|
|
|
190
|
|
Foreign currency transaction gain / (loss)
|
|
|
391
|
|
|
|
(1,769
|
)
|
|
|
388
|
|
|
|
(4,197
|
)
|
Impairment loss on available for sale marketable securities
|
|
|
(975,000
|
)
|
|
|
-
|
|
|
|
(975,000
|
)
|
|
|
-
|
|
Total other income / (expense) - net
|
|
|
(977,053
|
)
|
|
|
(2,269
|
)
|
|
|
(1,051,580
|
)
|
|
|
(4,007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,191,907
|
)
|
|
$
|
(8,889
|
)
|
|
$
|
(1,345,190
|
)
|
|
$
|
(126,150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Weighted average number of common shares outstanding - basic and diluted
|
|
|
29,286,135
|
|
|
|
28,771,381
|
|
|
|
29,046,211
|
|
|
|
28,720,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted
|
|
|
(0.04
|
)
|
|
|
(0.00
|
)
|
|
|
(0.05
|
)
|
|
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,191,907
|
)
|
|
$
|
(8,889
|
)
|
|
$
|
(1,345,190
|
)
|
|
$
|
(126,150
|
)
|
Unrealized loss on available for sale marketable securities
|
|
|
-
|
|
|
|
(952,923
|
)
|
|
|
-
|
|
|
|
(1,308,459
|
)
|
Foreign currency translation loss
|
|
|
(798
|
)
|
|
|
-
|
|
|
|
(798
|
)
|
|
|
-
|
|
Comprehensive Loss
|
|
$
|
(1,192,705
|
)
|
|
$
|
(961,812
|
)
|
|
$
|
(1,345,988
|
)
|
|
$
|
(1,434,609
|
)
|
See
accompanying notes to financial statements.
Global
Equity International Inc. And Subsidiary
Consolidated
Statements of Cash Flows
Nine
months ended September 30, 2012 and September 30, 2011 (Unaudited)
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(1,345,190
|
)
|
|
$
|
(126,150
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss on available for sale marketable securities
|
|
|
975,000
|
|
|
|
-
|
|
Bad debt
|
|
|
35,000
|
|
|
|
-
|
|
Common stock issued for services - Related party
|
|
|
10,000
|
|
|
|
-
|
|
Common stock issued for services
|
|
|
12,500
|
|
|
|
4,800
|
|
Consulting revenues received in marketable securities
|
|
|
(60,000
|
)
|
|
|
-
|
|
Issuance of warrants in connection with debt financing treated as interest expense
|
|
|
6,968
|
|
|
|
-
|
|
Amortization of debt discount
|
|
|
70,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Changes in Operating Assets and Liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(30,020
|
)
|
|
|
-
|
|
Prepaids
|
|
|
(1,368
|
)
|
|
|
-
|
|
Accounts payable
|
|
|
(10,891
|
)
|
|
|
29,052
|
|
Accounts payable - related parties
|
|
|
201,305
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used In Operating Activities:
|
|
|
(136,696
|
)
|
|
|
(92,298
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
Proceeds from notes - related parties
|
|
|
5,702
|
|
|
|
40,173
|
|
Proceeds from notes
|
|
|
70,000
|
|
|
|
35,500
|
|
Repayments of notes - related parties
|
|
|
(18,900
|
)
|
|
|
-
|
|
Repayment of notes
|
|
|
(30,000
|
)
|
|
|
(35,500
|
)
|
Proceeds from issuance of common stock
|
|
|
140,000
|
|
|
|
51,550
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
166,802
|
|
|
|
91,723
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in cash
|
|
|
30,106
|
|
|
|
(575
|
)
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rates on Cash
|
|
|
(798
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash at Beginning of Period
|
|
|
2,218
|
|
|
|
3,275
|
|
|
|
|
|
|
|
|
|
|
Cash at End of Period
|
|
$
|
31,526
|
|
|
$
|
2,700
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Debt discount recorded on notes payable
|
|
$
|
70,000
|
|
|
$
|
-
|
|
Conversion of notes payable to common stock
|
|
$
|
40,000
|
|
|
$
|
-
|
|
See
accompanying notes to financial statements.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
Note
1 Basis of Presentation
The
accompanying unaudited consolidated interim condensed financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange
Commission for interim financial information and with the instructions to form 10-Q and Article 8 of Regulation S-X.
Accordingly,
they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results
of operations and comprehensive loss, or cash flows. It is management’s opinion, however, that all material adjustments
(consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.
The
unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form
10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis,
for the years ended December 31, 2011 and 2010. The interim results for the period ended September 30, 2012 are not necessarily
indicative of results for the full fiscal year.
Note
2 Nature of Operations
Global
Equity Partners, PLC (“GEP”), a private company, was organized under the laws of the Republic of Seychelles on September
2, 2009. Global Equity International Inc. (the “Company” or “GEI”) a reporting company since June 21,
2012, was organized under the laws of the state of Nevada on October 1, 2010. On November 15, 2010, GEP executed a reverse recapitalization
with GEI.
Revenue
is generated from business consulting services, introduction fees, and equity participation.
Note
3 Summary of Significant Accounting Policies
Principles
of Consolidation
All
significant inter-company accounts and transactions have been eliminated in consolidation.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate could change in the near term due to one or more future non confirming events. Accordingly, the
actual
results could differ from those estimates.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
Risks
and Uncertainties
The
Company’s operations are subject to significant risk and uncertainties including financial, operational, competition and
potential risk of business failure. The risk of social and governmental factors is also a concern since the Company is headquartered
in Dubai.
Cash
The
Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September
30, 2012 and December 31, 2011 respectively, the Company had no cash equivalents.
Reclassification
We
have reclassified certain prior period amounts to conform to the current period presentation. These reclassifications have no
effect on the financial position or on the results of operations or cash flows for the periods presented.
Accounts
Receivable and Allowance for Doubtful Accounts
The
Company recognizes accounts receivable in connection with the services provided.
The Company recognizes an allowance for
doubtful accounts based on an analysis of current receivables aging and expected future write-offs, as well as an assessment of
specific identifiable customer accounts considered at risk or uncollectible.
During the nine
months ended September 30, 2012, the Company recorded $35,000 of bad debt expense pertaining to two Invoices the Company deemed
were uncollectible.
Marketable
Securities
|
(A)
|
Classification
of
Securities
|
At
the time of the acquisition, a security is designated as held-to-maturity, available-for-sale or trading, which depends on the
ability and intent to hold such security to maturity. Securities classified as trading and available-for-sale are reported at
fair value, while securities classified as held-to-maturity are reported at amortized cost.
All
securities held at September 30, 2012 and December 31, 2011 are designated as available for sale. Any unrealized and realized
gains and losses are reported as a component of other comprehensive income (loss). Realized gains (losses) will be computed on
a specific identification basis and will be reflected in the statement of operations.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
Cost
Method Investment
At
September 30, 2012, the Company has one investment, having a fair value of $160,000 that is treated as a cost method investment.
The value of the cost method investment pertains to the receipt of 10% of the common stock in a private company in which the best
evidence of fair value was the services rendered.
In
accordance with ASC NO. 325-20, “cost method investments”, the Company recognizes an investment in the stock of
an investee as an asset, as a component of marketable securities.
Under
the cost method of accounting for investments in common stock, dividends will be the basis for recognition by the Company of earnings
from the investment. The net accumulated earnings of an investee subsequent to the date of investment are recognized by the Company
only to the extent distributed by the investee as dividends. Dividends received in excess of earnings subsequent to the date of
investment are considered a return of investment and are recorded as reductions of cost of the investment. At September 30, 2012,
the Company had not received any dividends.
It
is not practicable to estimate the fair value of the investment since the cost of obtaining an independent valuation appears excessive
considering the materiality of the investment to the Company. Additionally, there have been identifiable events or changes in
circumstances that have had a significant adverse effect on the fair value of this investment.
|
(B)
|
Other
than
Temporary
Impairment
|
The
Company reviews its equity investment portfolio for any unrealized losses that would be deemed other-than-temporary and require
the recognition of an impairment loss in income. If the cost of an investment exceeds its fair value, the Company evaluates, among
other factors, general market conditions, the duration and extent to which the fair value is less than cost, and the Company’s
intent and ability to hold the investments. Management also considers the type of security, related-industry and sector performance,
as well as published investment ratings and analyst reports, to evaluate its portfolio. Once a decline in fair value is determined
to be other than temporary, an impairment charge is recorded and a new cost basis in the investment is established. If market,
industry, and/or investee conditions deteriorate, the Company may incur future impairments. The Company recorded as permanent
impairment loss on available for sale marketable securities of $975,000 and $0, as of September 30, 2012 and 2011 respectively.
Beneficial
Conversion Feature
For
conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion
feature” (“BCF”) and related debt discount.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
When
the Company records a BCF, the relative fair value of the BCF would be recorded as a debt discount against the face amount of
the respective debt instrument. The discount would be amortized to interest expense over the life of the debt.
Derivative
Liabilities
Fair
value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity
instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company
uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible
debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement.
If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments
as derivative financial instruments. Once the derivative liabilities are determined, they are adjusted to reflect fair value at
each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment
to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued
using the Black-Scholes pricing model.
Debt
Issue Costs and Debt Discount
The
Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of debt, convertible
debt and warrants. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying
debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Original
Issue Discount
For
certain convertible debt issued, the Company provides the debt holder with an original issue discount. The original issue discount
is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.
Revenue
Recognition
Revenue
is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed,
and collectability of the related fee is reasonably assured.
The
Company’s services do not include a provision for cancellation, termination, or refunds.
For
the nine months ended September 30, 2012 the Company received marketable securities and cash as consideration for services rendered.
For the nine months ended September 30, 2011 the Company received only cash as consideration for services rendered.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
At
September 30, 2012 and December 31, 2011
, the Company had the following concentrations of accounts receivables with customers:
Customer
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
D
|
|
|
-
|
%
|
|
|
43
|
%
|
E
|
|
|
-
|
%
|
|
|
57
|
%
|
G
|
|
|
99
|
%
|
|
|
-
|
%
|
For
the nine months ended September 30, 2012 and 2011
, the Company had the following concentrations of revenues with customers:
Customer
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
C
|
|
|
12
|
%
|
|
|
59
|
%
|
D
|
|
|
-
|
%
|
|
|
41
|
%
|
F*
|
|
|
15
|
%
|
|
|
-
|
%
|
G
|
|
|
29
|
%
|
|
|
-
|
%
|
H
|
|
|
37
|
%
|
|
|
-
|
%
|
No
securities were acquired from customers “C”, “D”, “G” & “H” as all of this
revenue was received in cash.
*
Non-marketable securities, accounted for under the cost method.
During
the nine months ended September 30, 2012, the Company received $60,000 in equity securities in a private company in exchange for
services performed. The valuation was based on 1,200,000 shares at $0.05 per share.
Share-based
payments
The
Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants at their
fair value on the grant date, which is based on the estimated number of awards that are ultimately expected to vest.
Share
based payments, excluding restricted stock, are valued using a Black-Scholes pricing model.
Share based payment awards
issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value
of the share-based payment, whichever is more readily determinable.
The grants
are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period
. If an
award is granted but vesting does not occur any previously recognized compensation cost is reversed in the period related to the
termination of service.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
When
computing fair value, the Company considered the following variables:
●
|
|
The
risk-free
interest
rate
assumption
is
based
on
the
U.S.
Treasury
yield
for
a
period
consistent
with
the
expected
term
of
the
share
based
payment
in
effect
at
the
time
of
the
grant.
|
●
|
|
The
expected
term
was
developed
by
management
estimate.
|
●
|
|
The
Company
has
not
paid
any
dividends
on
common
stock
since
inception
and
does
not
anticipate
paying
dividends
on
its
common
stock
in
the
near
future.
|
●
|
|
The
expected
volatility
is
based
on
management
estimates
regarding
private
company
stock,
where
future
trading
of
stock
in
a
public
market
is
expected
to
be
highly
volatile.
|
●
|
|
The
forfeiture
rate
is
based
on
historical
experience.
|
Earnings
per Share
Basic
earnings (loss) per share are computed by dividing net income (loss) by weighted average number of shares of common stock outstanding
during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number
of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
The
Company has no common stock equivalents, which, if exercisable, would be dilutive. A separate computation of diluted earnings
(loss) per share is not presented.
Comprehensive
Income (Loss)
The
comprehensive income or loss consists of the change in unrealized gain (loss), realized gain (loss) on available-for-sale marketable
securities and
changes in accumulated foreign currency translation adjustments.
Accumulated
other comprehensive income - December 31, 2011
|
|
$
|
615,000
|
|
Unrealized
losses on available for sale securities
|
|
|
(1,590,000
|
)
|
Impairment
loss on available for sale securities
|
|
|
975,000
|
|
Foreign
currency translation loss
|
|
|
(798
|
)
|
Accumulated
other comprehensive loss – September 30, 2012
|
|
|
(798
|
)
|
Foreign
currency
The
Consolidated Financial Statements are presented in United States Dollars. The company has a bank account in foreign currency.
The balance of this bank account was translated from its local currency (Euros) into the reporting currency, U.S. dollars, using
period end exchange rates. The resulting translation adjustments were recorded as a separate component of accumulated other comprehensive
loss. Revenues and expenses were translated using weighted average exchange rate for the period.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
Transaction
gains and losses resulting from foreign currency transactions were recorded as foreign exchange gains or losses in the consolidated
statement of operations. The Company did not enter into any financial instruments to offset the impact of foreign currency fluctuations.
Fair
Value of Financial Assets and Liabilities
The
Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance
on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability,
as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that
market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes
a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation
techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:
|
●
|
|
Level
1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
|
|
|
|
●
|
|
Level
2: Inputs reflect: quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar
assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities;
or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
|
|
|
●
|
|
Level
3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair
value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
|
The
carrying amounts reported in the balance sheet for prepaid expenses, accounts receivable, accounts payable, accounts payable to
related parties and loans payable to related parties, approximate fair value based on the short-term nature of these instruments.
The
Company has assets measured at fair market value on a recurring basis. Consequently, the Company had gains and losses reported
in the statement of comprehensive income (loss), that were attributable to the change in unrealized gains or losses relating to
those assets still held at September 30, 2012.
The
Company permanently impaired 1,500,000 shares of Monkey Rock Group Inc. due to the fact that the company was demoted to the Pink
sheets; there was no current financial information available on the company and no market to allow the Company to sell the stock.
The
following is the Company’s assets measured at fair value on a recurring and nonrecurring basis at September 30, 2012 and
December 31, 2011, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level
2); and significant unobservable inputs (Level 3):
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
|
|
September
30, 2012
|
|
|
December
31, 2011
|
|
Level 1
– None
|
|
$
|
-
|
|
|
$
|
-
|
|
Level
2 – Marketable Securities
|
|
|
-
|
|
|
|
1,590,000
|
|
Level 3
– Non-Marketable Securities
|
|
|
160,000
|
|
|
|
100,000
|
|
Total
|
|
$
|
160,000
|
|
|
$
|
1,690,000
|
|
The
following section describes the valuation methodologies the Company uses to measure financial instruments at fair value:
Marketable
Securities — The Level 2 position consists of the Company’s investment in equity securities of stock held in publically
traded companies. The valuation of these securities is based on significant inputs that are observable or can be derived from
or corroborated by observable market data. These valuations are typically based on quoted prices in active markets. The Company´s
investments in equity securities are in relatively inactive markets.
Non-Marketable
Securities at Fair Value on a Nonrecurring Basis — Certain assets are measured at fair value on a nonrecurring basis. The
level 3 position consist of investments accounted for under the cost method. The Level 3 position consists of investment in an
equity security held in a private company.
Changes
in Level 3 assets measured at fair value for the nine months ended September 30, 2012 and the year ending December 31, 2011 were
as follows:
Balance,
December 31, 2010
|
|
$
|
-
|
|
Realized and
unrealized gains (losses)
|
|
|
-
|
|
Purchases,
sales and settlements
|
|
|
100,000
|
|
Impairment
loss
|
|
|
-
|
|
Balance,
December 31, 2011
|
|
|
100,000
|
|
Realized and
unrealized gains (losses)
|
|
|
-
|
|
Purchases,
sales and settlements
|
|
|
60,000
|
|
Impairment
loss
|
|
|
-
|
|
Balance,
September 30, 2012
|
|
$
|
160,000
|
|
Recent
Accounting Pronouncements
There
are no new accounting pronouncements that have any impact on the Company’s financial statements.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
Note
4 Marketable Securities and Fair Value
The
following table represents the Company’s available for sale marketable securities holdings as of September 30, 2012:
Equity
securities at fair value – December 31, 2010
|
|
$
|
2,227,236
|
|
|
|
|
|
|
Equity securities
acquired in 2011
|
|
|
100,000
|
|
Unrealized
gains - 2011
|
|
|
405,000
|
|
Impairment
loss – 2011
|
|
|
(1,042,236
|
)
|
|
|
|
|
|
Equity
securities at fair value – December 31, 2011
|
|
|
1,690,000
|
|
|
|
|
|
|
Equity
securities acquired through settlements during the nine months ended September 30, 2012
|
|
|
60,000
|
|
Reclassification
of other comprehensive losses due to the permanent impairment of marketable securities.
|
|
|
(615,000
|
)
|
Impairment
loss during the nine months ended September 30, 2012
|
|
|
(975,000
|
)
|
|
|
|
|
|
Equity
securities at fair value – September 30, 2012
|
|
$
|
160,000
|
|
Note
5 Debt
The
Company received loans from related parties. The loans are non-interest bearing, unsecured and due on demand.
The
following table represents the loans payable activity as of September 30, 2012:
Loans
payable – related parties – December 31, 2010
|
|
$
|
40,173
|
|
|
|
|
|
|
Loans
payable – related parties – December 31, 2011
|
|
$
|
40,173
|
|
Proceeds
from loans
|
|
|
5,702
|
|
Repayments
|
|
|
(18,900
|
)
|
|
|
|
|
|
Loans
payable – related parties – September 30, 2012
|
|
$
|
26,975
|
|
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
(B) Accounts
payable – Related parties.
The
following table represents the accounts payable to related parties as of September 30, 2012 and December 31, 2011:
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Salaries
|
|
|
343,834
|
|
|
|
133,332
|
|
Expenses
|
|
|
2,999
|
|
|
|
12,196
|
|
|
|
$
|
346,833
|
|
|
$
|
145,528
|
|
(C)
Notes Payable
In
February and March 2012, the Company entered into two 90 day bridge loan agreements to raise a total of $70,000; $20,000 from
“note holder A” and $50,000 from “note holder B”. The loans had interest ranging from 0% - 3%. The loans
were unsecured.
In
connection with these loans, the Company issued 140,000 shares of common stock, having a fair value of $70,000 ($0.50/share),
based upon recent third party services rendered at that time, and 20,000 warrants to one lender having an exercise price of $1,
expiring September 2013. The fair value of the warrants was $6,968.
The
140,000 shares of common stock issued in connection with the bridge loans were treated as a debt discount of $70,000. The remaining
valuation of the warrants, $6,968, was recorded as interest expense.
The
Company applied fair value accounting for the warrants issued to the lender. The fair value of the warrants granted was estimated
on the date of grant using the Black-Scholes pricing model.
The
Black-Scholes assumptions used were as follows:
Exercise price
|
|
$
|
1.00
|
|
Expected dividends
|
|
|
0
|
%
|
Expected volatility
|
|
|
200
|
%
|
Risk fee interest
rate
|
|
|
0.35
|
%
|
Expected life
|
|
|
1.5
years
|
|
On
June 25, 2012, $30,000 was repaid to “note holder B” and the remaining $20,000 was converted into 40,000 shares of
common stock ($0.50/share) in September of 2012. There was no gain or loss on conversion.
On
July 5, 2012, “note holder A”, $20,000 was converted into 40,000 shares of common stock ($0.50/share). There was no
gain or loss on conversion.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
(D)
Debt Discount
The
following is a summary of 2012 Debt and Debt Discount activity:
Debt
discount (face amount of debt - $70,000)
|
|
$
|
70,000
|
|
|
|
|
|
|
Amortization
of debt discount to interest expense 2012
|
|
|
(70,000
|
)
|
|
|
|
|
|
Debt
discount - net
|
|
$
|
-
|
|
|
|
|
|
|
Balance - December
31, 2011
|
|
$
|
-
|
|
|
|
|
|
|
Proceeds from
notes
|
|
|
70,000
|
|
|
|
|
|
|
Repayments
|
|
|
(30,000
|
)
|
|
|
|
|
|
Conversion
of notes to common stock
|
|
|
(40,000
|
)
|
|
|
|
|
|
Balance - September
30, 2012
|
|
$
|
-
|
|
Note
6 Temporary Equity and Stockholders’ Equity
(A) Preferred
Stock
On
November 30, 2011, the Company authorized and designated 5,000,000 Series “A” convertible preferred shares of stock,
as a bonus to its Chief Executive Officer for services rendered, having a fair value of $480,000 ($0.096/share), based upon the
fair value of the services rendered, which represented the best evidence of fair value.
On
November 13, 2012 the Company´s board of directors approved an amendment to the Certificate of Designation; to amend the
voting rights and conversion rights of these Company´s Series “A” preferred shares as follows:
|
●
|
Voting
Rights:
10
votes
per
share
(votes
along
with
common
stock);
|
|
●
|
Conversion
Rights:
Each
share
of
Series
“A”
Preferred
is
convertible
into
ten
(10)
shares
of
common
stock
1
day
after
the
second
anniversary
of
issuance;
|
|
●
|
Liquidation
Rights:
None;
|
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
The
board of directors subsequently agreed that the Chief Executive Officer of the Company would retire to treasury 3,466,668 of these
Series “A” preferred shares and retain, the balance, 1,533,332 shares.
The
Company has determined that no beneficial conversion feature or derivative financial instruments exist in connection with the
Series “A”, convertible preferred stock, as the conversion rate was fixed at an amount equal to the market price of
the Company’s common stock. Additionally, there are a stated number of fixed shares.
Redeemable
Preferred Stock
Under
Regulation S-X, Rule 5-02-28, preferred stock must be classified outside shareholders’ equity when the stock is:
●Redeemable
at a fixed or determinable price on a fixed or determinable date,
●Redeemable
at the option of the holder, or
●Redeemable
based on conditions outside the control of the issuer.
The
Series A, convertible preferred stock is redeemable on December 1, 2013 it
is presented on the balance sheets as “Redeemable
Preferred Stock” in a manner consistent with temporary equity. There are no other features associated with this class of
redeemable preferred stock, which require disclosure. The carrying amount and redemption amount is $480,000. There are no redemption
requirements.
(B) Common
Stock
During
the nine months ended September 30, 2012, the Company issued the following shares:
Type
|
|
Quantity
|
|
|
Valuation
|
|
|
Range of value per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
280,000
|
|
|
$
|
140,000
|
|
|
$
|
0.50
|
|
Debt discount
(1)
|
|
|
140,000
|
|
|
$
|
70,000
|
|
|
$
|
0.50
|
|
Debt conversions
|
|
|
80,000
|
|
|
$
|
40,000
|
|
|
$
|
0.50
|
|
Services rendered
(2)
|
|
|
25,000
|
|
|
$
|
12,500
|
|
|
$
|
0.50
|
|
Services rendered
- Related Parties (2)
|
|
|
20,000
|
|
|
$
|
10,000
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
545,000
|
|
|
$
|
272,500
|
|
|
|
|
|
(1)
See Note 5(C)
(2)
In connection with the stock issued for services rendered, the Company determined fair value based upon the value of the services
provided, which was the most readily available evidence.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
(C) Stock
Warrants
The
following is a summary of the Company’s warrant activity:
|
|
Number of
Warrants
|
|
|
Weighted
Average
Exercise Price
|
|
Balance at December 31, 2011
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
20,000
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2012
|
|
|
20,000
|
|
|
$
|
1.00
|
|
The
weighted average remaining life for all outstanding warrants at September 30, 2012 is 0.95 year. The intrinsic value at September
30, 2012 and December 31, 2011 is $0. The fair value of each warrant granted is estimated on the date of grant using the Black-Scholes
pricing model. The Black Scholes assumptions used are as follows:
Exercise price
|
|
$
|
1.00
|
|
Expected dividends
|
|
|
0
|
%
|
Expected volatility
|
|
|
200
|
%
|
Risk fee interest rate
|
|
|
0.35
|
%
|
Expected life
|
|
|
1.5 years
|
|
Expected forfeitures
|
|
|
0
|
%
|
Note
7 Going Concern
As
reflected in the accompanying financial statements, the Company had a loss of $1,345,190 for the nine months ended September 30,
2012, $975,000 of which is due to the permanent impairment of marketable securities; and net cash used in operations of $136,696
for the nine months ended September 30, 2012; and a working capital deficit and stockholders´ deficit of $336,643 and $656,643,
respectively, for the period ended September 30, 2012. These factors raise substantial doubt about the Company’s ability
to continue as a going concern.
The
ability of the Company to continue its operations is dependent on Management’s plans, which include the raising of capital
through debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements.
The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.
Global
Equity International Inc. and Subsidiary
Notes
to Consolidated Financial Statements
September
30, 2012
(Unaudited)
The
Company expects to use its working capital to implement a marketing program to increase awareness of its business model, which
includes, but is not limited to, acquisition of private companies, with the intention of taking those companies public in the
United States and possibly dual listing those entities abroad. In the event that operating cash flows are slowed or nonexistent,
the Company plans to reduce its overhead wherever possible.
Depending
upon market conditions, the Company may not be successful in raising sufficient additional capital to achieve its business objectives.
In such event, the business, prospects, financial condition, and results of operations could be materially adversely affected
hence there is
certain doubt about the Company’s ability to continue as a going concern.
The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
For
the nine months ended September 30, 2012:
The
Company had revenues amounting to $409,000 for the nine months ended September 30, 2012. The general and administrative costs
were $702,610 which consisted of $59,730 of general office expenses, $369,999 of salaries albeit we accrued almost the entire
amount, $155,381 of professional fees and finally $117,500 of other expenses such as commissions paid and bad debt allowances.
The
net loss from operations for the period was $293,610. The net loss for the period was $1,345,190 due to other expenses and income
for the period ended September 30, 2012 amounting to $1,051,580; this amount included $388 of foreign currency transaction income,
$76,968 of interest expense and finally $975,000 of realized losses on available for sale marketable securities.
The
Company’s comprehensive loss amounted to $1,345,988 due to a further $798 of foreign currency adjustments.
At
September 30, 2012, the Company had 29,325,700 shares issued and outstanding, the weighted average was 29,046,211 shares hence
the loss per share was $(0.05).
For
the nine months ended September 30, 2011:
The
Company had revenues amounting to $96,541 for the nine months ended September 30, 2011. The general and administrative costs were
$218,684 which consisted of $41,619 of general office expenses, $83,293 of salaries albeit we accrued almost the entire amount,
$74,043 of professional fees and finally $19,729 of commissions paid.
The
net loss from operations for the period September 30, 2011 amounted to $122,143, and the net loss, after the foreign currency
transaction loss and interest income, amounted to $126,150.
The
comprehensive loss amounted to $1,434,609 due to $1,308,459 of unrealized losses on available for sale marketable securities.
The
Company’s other expenses and income for the period ended September 30, 2011 amounted to $4,007; this amount included $190
of interest income and $4,197 of foreign currency translation loss.
At
September 30, 2011, the Company had 28,780,700 shares issued and outstanding, the weighted average was 28,720,833 shares hence
the loss per share was $(0.00).
LIQUIDITY
AND CAPITAL RESERVES
As
of September 30, 2012, the Company had $31,526 in cash and net cash used in operations of $136,696. For the nine months ended
September 30 2012, the Company had a net loss of $1,345,190 and a net comprehensive loss of $1,345,988. The working capital deficit
amounted to $336,643. Finally, the Company had a stockholders´ deficit of $656,643 as of September 30, 2012.
It
is the Company’s intention to seek additional debt financing, which we plan to use as additional working capital to implement
our marketing program to increase awareness of our business model and also to expand our operations via the acquisition of companies
that are in a similar space and industry as ours, although we have not identified any companies that we would consider acquiring.
However,
we do not have any verbal or written agreements with anyone to provide us with debt financing. Any short fall in our projected
operating revenues will be covered by:
1)
The cash fees that we expect to receive during the next 12 months from the four clients we currently have under contract.
2)
Reducing our expenditures; and
3)
Receiving loans from one or more of our officers even though at the present time, we do not have verbal or written commitments
from any of our officers to lend us money.
Depending
upon market conditions, the Company may not be successful in raising sufficient additional capital for it to achieve its business
objectives.
In
such event, the business, prospects, financial condition, and results of operations could be materially adversely affected.
FUTURE
PLANS
We
currently have seven clients under contract, Arrow Cars International Inc., Black Swan Data Limited, RFC KK., CDP Security Group
Limited, Regis Cards Limited, Scorpion Performance Inc and Anglo African Mining Plc.
We
anticipate signing up an additional client by the end of 2012. However, we cannot guarantee that we will sign up any new clients
in 2012 or receive any revenues from new clients in 2012.
Our
specific plan of operations and milestones for October 2012 through September 2013 are as follows:
DURING
THE FOURTH QUARTER OF 2012, WE INTEND TO:
CONTINUE
TO DEVELOP THE INTRODUCER NETWORK FURTHER IN HOPE OF ATTRACTING NEW INTEREST FOR OUR SERVICES.
We
currently are relying on introductions to potential clients by the following firms in Asia and Europe:
|
1.
|
Merchant
House
Group
(London),
a
United
Kingdom
registered
investment
house;
|
|
2.
|
TAP
09
Gmbh,
an
Austrian
management
consultancy
firm
based
in
Wien,
Vienna;
|
|
3.
|
Mashreq
Bank,
an
Asian
retail
bank
based
in
Dubai,
U.A.E.;
and
|
|
4.
|
ABN
Amro
Private
Bank
based
in
Amsterdam,
the
Netherlands.
|
|
5.
|
Various
other
professionals
and
introducers
in
the
United
Kingdom
that
are
not
linked
to
any
specific
firm.
|
We
do not have any verbal or written agreements with the four firms identified above, as our relationship with each of them has been
developed over the past year or so.
CREATE
A MORE EFFICIENT SYSTEM FOR REVIEWING PROSPECTIVE BUSINESS.
Our
new business review system will change in 2012. We will concentrate our efforts on the quality of the company that is introduced
to us. We will start off by sending the client a standard due diligence list and request that they complete the list and send
us the support for review. We will then follow-up the due diligence with a “site visit” in order to properly understand
our client’s business model and more importantly meet the principals in person.
EXPAND
OUR CONSULTANCY TO INCLUDE MORE MERGER AND ACQUISITION ACTIVITY.
We
intend to form relationships with merger and acquisition specialists during 2012 and 2013, which, hopefully, will enable us to:
|
1)
|
Find
potential
merger
and
acquisition
candidates.
|
|
2)
|
Introduce
our
clients
to
brokers
and
investment
bankers.
|
|
3)
|
Introduce
the
our
clients
to
the
appropriate
professionals
(attorneys
and
accountants)
to
assist
them
in
a
public
offering
or
exchange
listing.
|
DURING
THE FIRST QUARTER OF 2013, WE INTEND TO:
EXPAND
OUR NETWORK OF CONTACTS WITHIN THE INVESTMENT COMMUNITY IN DUBAI
Our
network of investment companies in Dubai is currently small; however, we intend to substantially expand our Dubai network in order
to enable us to make introductions on a more institutional level. From October 2012 onwards, we intend to develop our network
to at least twelve Investment Institutions who may have interests in minority shareholding in companies from outside of the Middle
East Region.
We
will also identify support member of staff during this time to be engaged when finances allow such.
BETWEEN
NOVEMBER AND DECEMBER 2012, WE INTEND TO:
SIGN
CONTRACTS WITH A NEW CLIENT.
We
have a pipeline of at least twelve potentially new clients that we are currently reviewing and we hope that we will gain at least
one new consultancy contracts in 2012. This pipeline of potential clients will undoubtedly grow during 2012 and early 2013, making
the possibility of attracting a new client more achievable.
This
section of the annual report includes a number of forward-looking statements that reflect our current views with respect to future
events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate,
intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty
on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our
predictions.
DURING
THE FIRST SIX MONTHS OF 2013, WE INTEND TO:
WE
INTEND TO EXPAND OUR OPERATION INTO DUBAI
If
we are able to raise sufficient funds, it is our intention to open a fully staffed office in Dubai within the first half of 2013.
The first step will be get obtain a Category Four Dubai Business License. This will permit us to have an office and do business
within the confines of the DIFC (the Dubai International Financial Centre). We will be looking to employee at least four new members
of staff; two accounting assistants, one office manager and one IT person. If we do not seek a licence in Dubai as we believe
there are possibilities that would mean such a licence is detrimental to our business we will still seek to establish a full staffed
office with the same personnel indicated.
Cautionary
Forward - Looking Statement
The
following discussion and analysis of the results of operations and financial condition of Global Equity International, Inc. should
be read in conjunction with the unaudited financial statements, and the related notes. References to “we,” “our,”
or “us” in this section refers to the Company and its subsidiaries. Our discussion includes forward-looking statements
based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions..
We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “may,” “will,”
“should,” “could,” and similar expressions to identify forward-looking statements.
Certain
matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties
include, but are not limited to, the following:
|
●
|
the
volatile
and
competitive
nature
of
our
industry,
|
|
●
|
the
uncertainties
surrounding
the
rapidly
evolving
markets
in
which
we
compete,
|
|
●
|
the
uncertainties
surrounding
technological
change
of
the
industry,
|
|
●
|
our
dependence
on
its
intellectual
property
rights,
|
|
●
|
the
success
of
marketing
efforts
by
third
parties,
|
|
●
|
the
changing
demands
of
customers
and
|
|
●
|
the
arrangements
with
present
and
future
customers
and
third
parties.
|
Should
one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results
of current and future operations may vary materially from those anticipated.
Item
3. Quantitative and Qualitative Disclosure about Market Risk.
Not
applicable.
Item
4. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision
and with the participation of our Principal Executive Officer and Principal Financial Officer of the effectiveness of the design
and operation of our disclosure controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal
Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and Rule 15d-15(e) under
the Securities Exchange Act of 1934) were effective.
Management’s
Report on Internal Control over Financial Reporting
Commencing
with our Annual Report for the 2011 fiscal year, our management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control
over financial reporting includes those policies and procedures that:
|
(1)
|
pertain
to
the
maintenance
of
records
that
in
reasonable
detail
accurately
and
fairly
reflect
the
transactions
and
dispositions
of
our
assets;
|
|
(2)
|
provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
U.S.
GAAP,
and
that
our
receipts
and
expenditures
are
being
made
only
in
accordance
with
the
authorization
of
our
management
and
directors;
and
|
|
(3)
|
provide
reasonable
assurance
regarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use
or
disposition
of
our
assets
that
could
have
a
material
effect
on
the
financial
statements.
|
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
At
September 30, 2012,
we carried out an evaluation required by Rule 13a-15 or Rule 15d-15 of the Securities
Exchange Act of 1934 (the “Exchange Act”) under the supervision and with the participation of our management, including
our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures.
Based
upon such evaluation, such person concluded that as of such date, our disclosure controls and procedures were not effective at
the reasonable assurance level because, due to financial constraints, the Company does not maintain a sufficient complement of
personnel with an appropriate level of technical accounting knowledge, experience and training in the application of generally
accepted accounting principles commensurate with our financial accounting and reporting requirements. In the event that we may
receive sufficient funds for internal operational purposes, we plan to retain the services of additional internal management staff
to provide assistance to our current management with the monitoring and maintenance of our internal controls and procedures.
This
Quarterly Report does not include an attestation report of the Company’s registered public accounting firm due to a transition
period established by rules of the Securities and Exchange Commission for companies that have recent become reporting companies.
Changes
in internal control over financial reporting.
We
did not change our internal control over financial reporting during our last fiscal quarter that materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial reporting.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings.
The
Company is not aware of any threatened or pending litigation against the Company.
Item
1A. Risk Factors.
Not
applicable.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
On
July 5, 2012, the Company issued 40,000 restricted shares of common stock to a lender upon conversion of debt.
On
September 24, 2012, the Company issued 40,000 restricted shares of common stock to another lender upon conversion of debt.
The
proceeds from the sales of the Company’s common stock were used as working capital and for repayment of debt.
The
issuances of the above shares of common stock were exempt from the registration requirements of the Securities Act of 1933, as
amended, pursuant to Regulation S promulgated thereunder.
Item
3. Defaults upon Senior Securities.
None.
Item
4. Mine Safety Disclosures.
Not
applicable.
Item
5. Other Information.
None.
Item
6. Exhibits.
See
Exhibit Index below for exhibits required by Item 601 of regulation S-K.
EXHIBIT
INDEX
Exhibit
No.
Description
List
of Exhibits attached or incorporated by reference pursuant to Item 601 of Regulation S-K:
Exhibit
|
|
Description
|
31.1
*
|
|
Certification
under Section 302 of Sarbanes-Oxley Act of 2002
|
31.2
*
|
|
Certification
under Section 302 of Sarbanes-Oxley Act of 2002
|
32.1
*
32.2
*
|
|
Certification
under Section 906 of Sarbanes-Oxley Act of 2002
Certification
under Section 906 of Sarbanes-Oxley Act of 2002
|
* Filed
herewith.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
|
GLOBAL
EQUITY INTERNATIONAL, INC.
|
|
|
Date:
November 19, 2012
|
/s/
Peter J. Smith
|
|
Peter
J. Smith
|
|
President
and Chief Executive Officer
|
|
(Principal
Executive Officer)
|
Date:
November 19, 2012
|
/s/ Enzo Taddei
|
|
Enzo
Taddei
|
|
Chief
Financial Officer
|
|
(Principal
Accounting and Financial Officer)
|
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