[X] ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Indicate by check mark
if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark
if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark
whether the registrant: (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that he 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 corporate 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 or post such files). Yes [X] No [ ]
Indicate by check mark
if disclosure of delinquent filers pursuant to Item 405 of Regulation S- K is not contained herein, and will not be contained,
to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. Yes [ ] No [X]
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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
The aggregate market value
of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant’s
most recently completed second fiscal quarter (June 30, 2013) was approximately $2,621,204.
As of March 28, 2014,
there were 31,044,202 shares of our common stock outstanding.
This Annual Report on
Form 10-K (“Annual Report”), in particular the Management’s Discussion and Analysis of Financial Condition and
Results of Operations appearing in Item 7 herein (“MD&A”) contains certain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements give expectations or forecasts of future events. The reader can identify these forward-looking statements by the fact
that they do not relate strictly to historical or current facts. They use words such as “believe(s),” “goal(s),”
“target(s),” “estimate(s),” “anticipate(s),” “forecast(s),” “project(s),”
plan(s),” “intend(s),” “expect(s),” “might,” may” and other words and terms of
similar meaning in connection with a discussion of future operating, financial performance or financial condition. Forward-looking
statements, in particular, include statements relating to future actions, prospective services or products, future performance
or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal
proceedings, trends of operations and financial results.
Any or all forward-looking
statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which
speak only as of the date of this Annual Report. These statements are based on current expectations and the current economic environment.
They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future
performance; actual results could differ materially from those expressed or implied in the forward-looking statements. Forward-looking
statements can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be
important in determining the Company’s actual results and financial condition. The reader should consider the following
list of general factors that could affect the Company’s future results and financial condition.
Among the general factors
that could cause actual results and financial condition to differ materially from estimated results and financial condition are:
No assurances can be given
that the results contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable.
We assume no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent
to the date of this Annual Report. The reader is advised, however, to consult any further disclosures we make on related subjects
in our filings with the SEC.
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
Note
1 - 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
2 - Going Concern
As
reflected in the accompanying financial statements, the Company had a loss of $2,344,958 for the year ended December 31, 2013,
$160,000 of which is due to the permanent impairment financial assets; and net cash used in operations of $(929,502) for the year
ended December 31, 2013; and a working capital deficit of $(1,109,309) and stockholders´ deficit of $2,440,966 for the year
ended December 31, 2013. 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.
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 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. These consolidated 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.
Note
3 - Summary of Significant Accounting Policies
Principles
of Consolidation
Global
Equity International Inc. is the parent company of its 100% subsidiary Global Equity Partners Plc. 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 the financial statements and the reported amounts of revenue and expenses during the reporting period.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
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.
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 December
31, 2013 and at December 31, 2012 respectively; the Company had no cash equivalents.
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.
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 December 31, 2013 and December 31, 2012, respectively were designated as available for sale. Any un-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.
Cost
Method Investment
At
March 31, 2013, the Company had investment in securities of two different Companies, having a cost of $163,000 that is treated
as a cost method investment. The value of the cost method investment pertains to the receipt of 9.2% of the common stock in a
private company in which the best evidence of value was the services rendered and a further 9.86% of the common stock in another
private company in which the best evidence of value was the services rendered.
At
June 30, 2013, there were identifiable events or changes in circumstances that had a significant adverse effect on the value of
one of the investments: hence the Company impaired $160,000 of the investments.
Also
at June 30, 2013, the Company received 2,000,000 shares from a private company and client having a cost of $2,000 that is treated
as a cost method investment. The value of the cost method investment pertains to the receipt of 8.55% of the common stock in a
private company in which the best evidence of value was the services rendered.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
Equity
investment in companies is accounted for under the cost method as the equity investments do not have readily determinable fair
values. As per ASC codification 320 “Certain Investments in Debt and Equity Securities”, non-marketable equity securities
that do not have a readily determinable fair value are not required to be accounted for under the equity method and are typically
carried at cost.
(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 $160,000 and $975,000 as of December 31, 2013 and 2012, 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.
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.
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 convertible
debt. 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.
Fixed
Assets
Fixed
Assets are to be stated at cost of acquisition less accumulated depreciation. Depreciation is provided based on estimated useful
lives of the assets. Cost of improvements that substantially extend the useful lives of assets can be capitalized. Repairs and
maintenance expenses are to be charged to expense when incurred. In case of sale or disposal of an asset, the cost and related
accumulated depreciation are removed from the consolidated financial statement.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
|
|
December
31, 2013
|
|
|
December
31, 2012
|
|
Office
equipment
|
|
$
|
9,316
|
|
|
$
|
6,579
|
|
Accumulated
depreciation
|
|
$
|
(1,499
|
)
|
|
$
|
(117
|
)
|
|
|
|
|
|
|
|
|
|
Net
fixed assets
|
|
$
|
7,817
|
|
|
$
|
6,462
|
|
Revenue
Recognition
We
recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2)
the product or service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable;
and (4) the collection of our fees is probable.
The
Company’s services do not include a provision for cancellation, termination, or refunds.
For
the years ended December 31, 2013 and December 31, 2012 the Company received marketable securities and cash as consideration for
services rendered.
At
December 31, 2013 and December 31, 2012, the Company had the following concentrations of accounts receivables with customers:
Customer
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
ACI
|
|
|
100
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
SPI
|
|
|
0
|
%
|
|
|
99
|
%
|
For
the years ended December 31, 2013 and December 31, 2012, the Company had the following concentrations of revenues with customers:
Customer
|
|
December
31, 2013
|
|
|
December
31, 2012
|
|
|
|
|
|
|
|
|
SAC
|
|
|
14
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
ANR
|
|
|
14
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
DSI
|
|
|
63
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
ACI
|
|
|
8
|
%
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
VOZ
|
|
|
0
|
%
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
REG
|
|
|
0
|
%
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
SPI
|
|
|
0
|
%
|
|
|
30
|
%
|
During
the year ended December 31, 2013, the Company received $3,000 in equity securities in a private company in exchange for services
performed. The valuation was based on 3,000,000 shares at $0.001 per share. The company also received $2,000 in equity securities
in another private company in exchange for services to be performed. The valuation was based on 2,000,000 shares at $0.001 per
share.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
The
company currently holds the following equity securities in private and also reporting companies:
Company
|
|
No.
Shares
|
|
|
Status
|
|
|
|
|
|
|
M1
Lux AG
|
|
|
2,000,000
|
|
|
Private
Company
|
Monkey
Rock Group Inc.
|
|
|
1,500,000
|
|
|
Reporting
Company – OTC
|
Voz
Mobile Cloud Limited
|
|
|
3,200,000
|
|
|
Private
Company
|
Arrow
Cars International Inc.
|
|
|
3,000,000
|
|
|
Reporting
Company – OTC
|
Direct
Security Integration Inc.
|
|
|
2,000,000
|
|
|
Private
Company
|
|
|
|
|
|
|
|
|
|
|
11,700,000
|
|
|
|
Deferred
Revenue
Deferred
revenue represents fees that have been received by the Company for requested services that have not been substantially completed.
During the year ended December 31, 2013 the Company received $307,000 from two clients for service to be rendered during the year
2013 and 2014. At December 31, 2013, the Company recognized $60,000 of this deferred revenue as revenue; leaving a deferred revenue
balance of $247,000.
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
.
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.
|
Income
Taxes
Income
taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases, and operating loss carry-forwards. Deferred income tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets
if it is considered more likely than not that some portion, or all, of the deferred income tax assets will not be realized.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
On
November 15, 2010, the date of the reverse recapitalization, the Company became subject to federal and state income taxes.
The
Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized
income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition
or measurement are reflected in the period in which the change in judgment occurs. The Company will record interest and penalties
related to unrecognized tax benefits in income tax expense. There were no penalties or interest for the years ended December 31,
2013 and 2012.
The
Company may be subject to examination by the Internal Revenue Service (“IRS”) and state taxing authorities for 2013
and 2012 tax years.
The
Company’s subsidiary, GEP, is incorporated under the laws of the Republic of Seychelles (“Seychelles”). A company
is subject to Seychelles income tax if it does business in Seychelles. A company that is incorporated in Seychelles, but that
does not do business in Seychelles, is not subject to income tax there. GEP did not do business in Seychelles for the years ended
December 31, 2013 and December 31, 2012, and GEP does not intend to do business in Seychelles in the future. Accordingly, the
Company is not subject to income tax in Seychelles for the years ended December 31, 2013 and December 31, 2012. All business activities
were performed by GEP in Dubai for the years ended December 31, 2013 and December 31, 2012. Dubai does not have an income tax.
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.
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.
|
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
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 December 31, 2013.
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 December 31, 2013 and
December 31, 2012, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level
2); and significant unobservable inputs (Level 3):
|
|
December
31, 2013
|
|
|
December
31, 2012
|
|
|
|
|
|
|
|
|
Level 1 – None
|
|
$
|
-
|
|
|
$
|
-
|
|
Level 2 – Marketable Securities
|
|
|
-
|
|
|
|
-
|
|
Level 3 – Non-Marketable Securities
|
|
|
5,000
|
|
|
|
160,000
|
|
Total
|
|
$
|
5,000
|
|
|
$
|
160,000
|
|
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.
Management
believes that an “other-than-temporary impairment” would not be justified, as according to ASC 320-10 an investment
is considered impaired when the fair value of an investment is less than its amortized cost basis. The impairment is considered
either temporary or other-than-temporary. The accounting literature does not define other-than-temporary. It does, however, state
that other-than-temporary does not mean permanent; although, all permanent impairments are considered other-than-temporary. The
literature does provide some examples of factors which may be indicative of an “other-than-temporary impairment”,
such as:
|
●
|
the
length of time and extent to which market value has been less than cost;
|
|
|
|
|
●
|
the
financial condition and near-term prospects of the issuer; and
|
|
|
|
|
●
|
the
intent and ability of the holder to retain its investment in the issuer for a period of time sufficient to allow for any anticipated
recovery in market value.
|
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
Management
believes that the fair value of its investment has been correctly measured, as the length of time that the stock has been less
than cost is nominal. The financial condition and near-term prospects of the Company’s investment is expected to realize
improved value due to a public reverse merger.
Changes
in Level 3 assets measured at fair value for the years ended December 31, 2013 and 2012 were as follows:
Balance, December 31, 2011
|
|
|
100,000
|
|
Realized and unrealized gains (losses)
|
|
|
-
|
|
Purchases, sales and settlements
|
|
|
60,000
|
|
Impairment loss
|
|
|
-
|
|
Balance, December 31, 2012
|
|
|
160,000
|
|
Realized and unrealized gains (losses)
|
|
|
-
|
|
Purchases, sales and settlements
|
|
|
5,000
|
|
Impairment loss
|
|
|
(160,000
|
)
|
Balance, December 31, 2013
|
|
$
|
5,000
|
|
Loans
to Third Parties
On
March 22, 2013 the Company granted a loan to Dreamscapes Properties International Inc. The principal amount lent was $6,000, the
agreed interest rate was 5% per annum and finally, the loan would have to be repaid no later than one year from the date that
the loan was granted. This loan is currently in default, the Company plans to speak to Dreamscapes Properties International Inc.
with a review to discuss a payment plan over the next 6 months.
Recent
Accounting Pronouncements
There
are no new accounting pronouncements that have any impact on the Company’s financial statements.
Note
4 - Debt
(A)
Related Party – short term
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 December 31, 2013 and as of December 31, 2012 respectively:
Loans payable – related party
– December 31, 2012
|
|
$
|
48,075
|
|
Proceeds from loans
|
|
|
9,819
|
|
Repayments
|
|
|
700
|
|
Loans payable – related party – December
31, 2013
|
|
$
|
57,194
|
|
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
(B)
Related party – long term
The
Company has accrued salary to the officers and directors of the Company based on the terms of the employment agreements entered
into with each officer. As at December 31, 2013, $209,475 was due to the Chief Executive Officer and $115,000 was due to the Chief
Financial Officer. During the quarter ended March 31, 2013, the Company converted this amount to Convertible Loan Payable. This
amount will be advanced for a term of two years and is repayable on demand and will accrue interest at 10% on the loan period.
The agreement also gives an option to the officers of the Company to convert all or part of the debt that the Company maintains
with them into restricted shares at $1.20 per share. The balance outstanding in the Loan Payable account as at December 31, 2013
is $324,475. The Company assessed if there is a beneficial conversion feature cost associated with this transaction, none was
noted.
(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 rates 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 options to one lender having an exercise price of $1,
expiring September 2013. The fair value of the options 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 options, $6,968, was recorded as interest expense.
Both
note holder “A” and “B” were paid in full.
The
Company applied fair value accounting for the options issued to the lender. The fair value of the options granted was estimated
on the date of grant using the Black-Scholes pricing model. (Please refer to note 6 C Stock Options).
On
June 25, 2012, $30,000 was repaid to “note holder B” and the remaining $10,000 was converted into 40,000 shares of
common stock ($0.25/share) in September of 2012, thereby leaving an outstanding balance as of December 31, 2012 of $10,000. There
was no gain or loss on conversion. During the quarter ended March 31, 2013 the Company repaid the balance of $10,000.
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.
On
November 16, 2012, the Company issued 2,000 common restricted shares ($0.25/share) to “note holder A” in lieu of $500
interest due. The balance outstanding for the interest payment of $500 is outstanding as at September 30, 2013.
On
April 23, 2013, the Company secured a nine month convertible loan for $42,500 with an 8% interest rate due on January 29, 2014.
The terms of the conversion will be a 42% discount to market based on an average price calculated on the 10 trading days prior
to the conversion date. If the Company opts to pay the loan back on or before the 9 month period ends, hence not converting the
debt into equity; borrower shall make payment to the holder of an amount in cash (the “Optional Prepayment Amount”)
equal to 130% of total amount due inclusive of principal and interest accrued. On October 18, 2013, the Company exercised its
option to prepay the loan it secured for $42,500.
On
June 4, 2013, the Company secured a twelve month convertible loan for $50,000 with the understanding that the Company will issue
10,000 common restricted shares in lieu of interest, these shares are not issued as of September 30, 2013 and accounted for as
Stock Payable. The terms of the conversion will be either a $0.50 conversion price or a 25% discount to market based on an average
price calculated on the 10 trading days prior to the conversion date, whichever is the lowest.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
On
September 9, 2013, the Company secured a nine month convertible loan for $32,500 with an 8% interest rate due on June 11, 2014.
The terms of the conversion will be a 42% discount to market based on an average price calculated on the 10 trading days prior
to the conversion date. If the Company opts to pay the loan back on or before the 9 month period ends, hence not converting the
debt into equity; borrower shall make payment to the holder of an amount in cash (the “Optional Prepayment Amount”)
equal to 130% of total amount due inclusive of principal and interest accrued.
On
October 9, 2013, the Company secured a two month loan for GBP 75,000 (equivalent to $120,420) with the understanding that the
Company will issue 10,000 common restricted shares, issued to the lender on December 7, 2013, and also repay 35,000 GBP (equivalent
to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time. The Company compensated
the lender with an additional 20,000 common restricted shares and for this the lender agreed to five month extension. This stock
compensation as issued to the lender also on December 12, 2013.
On
October 17, 2013, the Company secured a three month bridge loan for 200,000 GBP (equivalent to $319,598) with the agreement to
repay the principle plus 5% per month interest on or before January 18, 2014.
On
November 29, 2013, the Company received a loan in the amount of $450,000 from United Kingdom resident and subsequently the Company
issued a Convertible Note due on November 25, 2014 (“Convertible Note”). The Convertible Note will bear interest at
the rate of 10% per annum until maturity. The Convertible Note may be converted into shares of the issuer’s common stock
at a conversion price of $.50 per share at the option of the holder of the Convertible Note. If the Convertible Note is not paid
in full or converted into common stock of the Company prior to its maturity date, then the Convertible Note will accrue interest
at the rate of 4.5% per annum from the maturity date until paid in full. This $450,000 loan was used as a guarantee for a loan
amounting to $3,540,000 applied for to a United Kingdom financial institution on December 9, 2013. At December 31, 2013 the loan
had still not been approved due to technical reasons solely related to the lender.
The
amounts paid to acquire the debt financing have been treated as a debt discount hence at December 31, 2013, the Company recorded
debt discount of $40,200. This will be amortized over the life of the respective loans.
During
the year ended December 31, 2013 and December 31, 2012, the Company amortized $50,348 and $70,000.
(D)
Accounts payable – related parties
The
following table represents the accounts payable to related parties as of December 31, 2013 and December 31, 2012, respectively:
|
|
12/31/2013
|
|
|
12/31/2012
|
|
|
|
|
|
|
|
|
Salaries
|
|
|
182,080
|
|
|
|
414,034
|
|
Expenses
|
|
|
9,973
|
|
|
|
7,466
|
|
|
|
$
|
192,053
|
|
|
$
|
421,500
|
|
As
discussed in note no. 4(B), the Company converted $324,475 of related party accounts payable into a convertible loan during the
year ended December 31, 2013.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
Note
5 - Income Taxes
The
income tax provision differs from the amount of tax determined by applying the federal statutory rate approximately as follows:
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Income Tax provision at Statutory rate:
|
|
$
|
(814,647
|
)
|
|
$
|
(536,981
|
)
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in income tax due to:
|
|
|
|
|
|
|
|
|
Non-Taxable foreign earnings
|
|
|
317,325
|
|
|
|
457,519
|
|
State taxes
|
|
|
-
|
|
|
|
-
|
|
Change in valuation allowance
|
|
|
497,322
|
|
|
|
79,462
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
Net
deferred tax assets and liabilities are comprised approximately of the following:
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Deferred tax assets (liabilities), current
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets (liabilities), non-current
|
|
|
|
|
|
|
|
|
Net operating loss
|
|
$
|
497,322
|
|
|
$
|
79,462
|
|
Valuation allowance
|
|
$
|
(497,322
|
)
|
|
$
|
(79,462
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets (liabilities)
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-current assets (liabilities)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income taxes.
During
the years ended December 31, 2013 and 2012, the Company generated net operating losses of approximately $497,322 and $79,462,
respectively, for federal and Florida income tax purposes. These losses can be carried forward and used to offset taxable income
in future years and will start expiring on December 31, 2032.
In
assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion
or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences become deductible. Management considers
the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this
assessment. As of December 31, 2013 and 2012, based upon the levels of historical taxable income and the limited experience of
the Company, the Company believes that it is more-likely-than-not that it will not be able to realize the benefits of some or
all of these deductible differences. Accordingly, a valuation allowance of approximately $497,322 and $79,462 has been provided
in the accompanying financial statements as of December 31, 2013 and 2012, respectively.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
For
the year ended December 31, 2013 and December 31, 2012, GEP incurred a loss of approximately $2,344,958 and $2,855,556, respectively.
Therefore,
GEP had negative earnings and profits and does not have any foreign earnings and profits to be distributed. Since GEP does not
have any undistributed earnings, the Company has not recorded a deferred tax liability associated with the foreign earnings as
of December 31, 2013 and 2012.
The
Company is not subject to any foreign income taxes for the years ended December 31, 2013 and 2012. The Company may be subject
to examination by the Internal Revenue Service (“IRS”) and state taxing authorities for 2013 and 2012 tax years.
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 the 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;
|
|
|
|
|
●
|
Dividend
Rights: None;
|
|
|
|
|
●
|
Liquidation
Rights: None
|
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.
On
November 21, 2012 the Company’s CEO gave 533,332 of his Series “A” preferred shares to the Company’s CFO
(400,000) and two other employees (133,332). As the 533,332 preferred shares will convert into 5,333,320 on December 1, 2014 and
the price per common share on November 21, 2012 was $0.25, the contribution by the officer to the Company was calculated at $1,333,330.
On
December 12, 2013 the Company issued 450,000 Series “A” preferred shares to the Company’s CFO (200,000), CEO
(200,000) and one employee (50,000) having a fair value of $540,000 ($0.12 per share), based upon the fair value of the services
rendered, which represented the best evidence of fair value.
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.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
Redeemable
Preferred Stock
Under
Regulation S-X, Rule 5-02-28, preferred stock must be classified outside of stockholders’ 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, 2014 and 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 $1,020,000.
There are no redemption requirements.
(B)
Common Stock
During
the year ended December 31, 2013, the Company issued the following shares:
Date
|
|
|
Type
|
|
Shares
|
|
|
Valuation
|
|
|
Range
of value
per share
|
|
|
02/15/2013
|
|
|
Stock issued for services and payables
|
|
|
100,000
|
|
|
$
|
80,000
|
|
|
$
|
0.80
|
|
|
03/12/2013
|
|
|
Stock issued for settlement of debt
|
|
|
75,000
|
|
|
$
|
82,500
|
|
|
$
|
1.10
|
|
|
04/05/2013
|
|
|
Stock issued for services
|
|
|
150,000
|
|
|
$
|
142,500
|
|
|
$
|
0.95
|
|
|
04/05/2013
|
|
|
Stock issued for services
|
|
|
500,000
|
|
|
$
|
125,000
|
|
|
$
|
0.25
|
|
|
04/15/2013
|
|
|
Stock issued for services
|
|
|
25,000
|
|
|
$
|
13,750
|
|
|
$
|
0.55
|
|
|
04/24/2013
|
|
|
Stock issued for services
|
|
|
150,000
|
|
|
$
|
43,500
|
|
|
$
|
0.29
|
|
|
05/03/2013
|
|
|
Stock issued for cash
|
|
|
16,667
|
|
|
$
|
10,000
|
|
|
$
|
0.60
|
|
|
05/17/2013
|
|
|
Stock issued for services
|
|
|
40,000
|
|
|
$
|
6,800
|
|
|
$
|
0.17
|
|
|
05/17/2013
|
|
|
Stock issued for services
|
|
|
99,385
|
|
|
$
|
16,972
|
|
|
$
|
0.17
|
|
|
12/12/2013
|
|
|
Stock issued in lieu of interest
|
|
|
30,000
|
|
|
$
|
3,900
|
|
|
$
|
0.13
|
|
|
Various
|
|
|
Stock issued for services
|
|
|
120,000
|
|
|
$
|
50,400
|
|
|
$
|
0.42
|
|
|
12/12/2013
|
|
|
Stock issued for services
|
|
|
10,000
|
|
|
$
|
1,200
|
|
|
$
|
0.12
|
|
|
12/18/2013
|
|
|
Stock issued for services
|
|
|
100,000
|
|
|
$
|
12,000
|
|
|
$
|
0.12
|
|
(C)
Stock options
The
following is a summary of the Company’s options activity:
|
|
Number
of options
|
|
|
Weighted
Average
Exercise Price
|
|
Balance at December 31, 2012
|
|
|
20,000
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
- Granted
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
- Exercised
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
- Forfeited
|
|
|
20,000
|
|
|
$
|
1,00
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2013
|
|
|
-
|
|
|
$
|
-
|
|
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
This
stock option expired on September 13, 2013. The fair value of each option granted is 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
|
|
|
182
|
%
|
Risk fee interest rate
|
|
|
0.3
|
%
|
Expected life
|
|
|
1.5
years
|
|
Expected forfeitures
|
|
|
0
|
%
|
(D)
Stock payable
On
April 24, 2013, the Company entered into a consulting agreement with Robert Sullivan. As per the agreement the Company will be
issuing 150,000 restricted shares to the consultant. The agreement also stipulates a condition where the Company guarantees a
minimal value of $100,000 at the time of legend removal and any shortfall will be taken care of by issuance of additional shares.
As of the date of the agreement the shares are valued at $43,500. The value of shares as at December 31, 2013 were $22,650 hence
the difference of $77,350 is recorded as stock payable.
On
June 4, 2013, the Company received $50,000 from Direct Securities Integration, Inc in pursuance of a notes payable agreement.
The agreement stipulates a condition for the payment of 10,000 shares in lieu of interest on the day of agreement. Such shares
are not issued as of December 31, 2013, and are valued at $5,500.
Note
7 - Commitments and contingencies
On
April 24, 2013, the Company entered into advertisement contract with Robert Sullivan. The Company is required to pay $30,000 in
cash and issue 150,000 shares. During 2013 the Company paid $10,000 in cash, the balance of $20,000 was due within 60 days of
the signing of the agreement; this amount is unpaid as at December 31, 2013, 2013. The Company has guaranteed a value of $100,000
for its shares at the time of legend removal. At December 31, 2013 the legend is still not removed, the Company has accrued for
the shortfall of $77,350 as a stock payable.
Note 8 - Other current
assets
The following is a summary of the Company’s
other current assets:
|
|
2013
|
|
|
2012
|
|
Cash collateral
paid to secure loan
|
|
$
|
450,000
|
(1)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Retainers paid to legal
counsel
|
|
|
2,201
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
452,201
|
|
|
$
|
-
|
|
_______________________
|
(1)
|
Please
refer to Note 4(C) – Notes payable and Note 9 – Subsequent Events.
|
Note 9 - Subsequent
events
On December 9, 2013, the Company signed a
10 year loan facility agreement with and Irish company called PPF Capital Source Lending Company 2 Limited domiciled in Dublin
(Ireland), for $3,540,000 at 4.5% interest per annum. The interest will be paid on a basis monthly but only on the amounts drawn
down on the loan.
Global
Equity International, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
December
31, 2013 and 2012
The company had to guarantee the loan by way
of a cash payment of $450,000 which it did on December 12, 2013 (this amount is reflected on our balance sheet under “other
current assets”).
The loan agreement was and still is contingent
on PPF´s securing a minimum cash collateral of $10,000,000 collectively or individually from all borrowers / subscribers.
To date, PPF has not reached this critical mass of $10,000,000 but we understand that PPF is not far off this amount hence drawdown
can be estimated on or before April 30, 2014.
On February 4, 2014 we were engaged by a Dutch
company called Medinas Holdings BV. The scope of our engagement was to source the company a Dubai sponsor for a subsequent listing
of its stock on the Dubai NASDAQ.
On February 10, 2014 we were engaged by a
Norwegian and UK based company called Your MD AS. The scope of our engagement was to source the company a Dubai sponsor for a
subsequent listing of its stock on the Dubai NASDAQ.
On February 26, 2014 we were engaged by a
United Kingdom and Africa based company called Iron ore of Africa Limited. The scope of our engagement was to source the company
a Dubai sponsor for a subsequent listing of its stock on the Dubai NASDAQ.
PART I
BUSINESS DEVELOPMENT
BACKGROUND
Global Equity International
Inc. (“Company”) was incorporated on October 1, 2010, as a Nevada corporation, for the express purpose of acquiring
Global Equity Partners Plc, a corporation formed under the laws of the Republic of Seychelles (“GEP”) on September
2, 2009.
GEP is a Dubai based firm
that provides consulting services, such as corporate restructuring, advice on management buy outs, management recruitment, website
design and development for corporate marketing, investor and public relations, regulatory compliance and introductions to financiers,
to companies desiring to be listed on stock exchanges in various parts of the world.
Our authorized capital
consists of 70,000,000 shares of common stock, $.001 par value, and 5,000,000 shares of preferred stock, $.001 par value.
On November 15, 2010,
we entered into a Plan and Agreement of Reorganization (“Plan of Reorganization”) with GEP and its sole shareholder,
Peter J. Smith, pursuant to which we would acquire 100% of the common stock of GEP. We consummated the Plan of Reorganization
effective December 31, 2010, by issuing 20,000,000 shares of our common stock to Peter J. Smith, at which time GEP became our
wholly-owned subsidiary and Peter J. Smith was appointed as our President, Chief Executive Officer and Director.
As a result of our acquisition
of GEP, we provide corporate advisory services to companies desiring to have their shares listed on stock exchanges or quoted
on quotation bureaus in various parts of the world. We have offices in the United States, Dubai, London and Marbella (Spain).
We have affiliations with firms located in some of the world’s leading financial centers such as London, New York, Frankfurt
and Dubai. These affiliations are informal and are comprised of personal relationships with groups of people or people with whom
our Company or our management has done, or attempted to do, business in the past. We do not have any contractual arrangements,
written or otherwise, with our affiliations.
IMPLICATIONS OF BEING AN EMERGING GROWTH
COMPANY
As a Company with less
than $1 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the
Jumpstart Our Business Startups Act of 2012 (also known as the “JOBS Act”). As an emerging growth company, we are
entitled to take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public
companies. These provisions include:
|
●
|
Only
two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly
reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
|
|
●
|
Reduced
disclosure about our executive compensation arrangements;
|
|
●
|
Not
having to obtain non-binding advisory votes on executive compensation or golden parachute arrangements; and
|
|
●
|
Exemption
from the auditor attestation requirement in the assessment of our internal control over financial reporting.
|
We may take advantage
of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease
to be an emerging growth company if we have more than $1 billion in annual revenues, if we have more than $700 million in market
value of our stock held by non-affiliates, or if we issue more than $1 billion of non-convertible debt over a three-year period.
We may choose to take advantage of some but not all of these reduced burdens in the future. We have irrevocably elected to opt
out of the extended transition period for complying with new or revised accounting standards pursuant Section 107(b) of the JOBS
Act.
Peter Smith founded Global
Equity Partners Plc to assist small to medium size businesses with management restructuring and corporate restructuring, in general,
and also to obtain, if requested by its clients, access to capital markets via equity and debt financings.
GEP looks for promising
small to medium size companies ($2,000,000 to $10,000,000 in assets) and introduces these clients to private and institutional
investors in our network (“rol-a-dex”) of over 179 “financial introducers” around the world. These financial
introducers are simply groups of people or institutions that are presently introducing new clients to us or who have introduced
new clients to our management in the past. We do not have any contractual arrangements, written or otherwise, with these financial
introducers.
Presently, GEP is our
only operating business. Global Equity International’s present operations are limited to insuring compliance with regional,
state and national securities regulatory agencies and organizations. In addition, GEI is charged with (i) handling our periodic
obligations under the Securities Exchange Act of 1934; (ii) managing our investor relations; and (iii) raising debt and equity
capital necessary to fund our operations and enhance and grow our business. GEI does not offer or conduct any consulting or advisory
services; as such services are performed solely by our foreign subsidiary, GEP.
We currently offer the
following services to our clients:
|
●
|
Corporate
restructuring
|
|
●
|
Website
design, development and marketing advice
|
|
●
|
Investor
and public relations
|
|
●
|
Introductions
to financiers
|
CORPORATE RESTRUCTURING SERVICES
We advise and assist our
clients in determining the corporate structure that is most suitable to their business models. We recommend management changes
where necessary. We also offer them corporate governance models customized to their specific organizations and desired exchange
listings. We also review and analyze their balance sheets and capital structures and make recommendations on debt consolidations,
equity exchanges for debt, proper capital structures and viability and timing of equity and debt offerings. We do not presently
recommend and we do not intend in the future to recommend that our clients merge or be acquired by shell companies.
MANAGEMENT BUY OUTS
We assist our clients
in every aspect of management buy outs from corporate restructuring to debt financing and also introduce buyers and sellers to
financiers for private equity placements.
MANAGEMENT RECRUITING
We assist our clients
with the recruitment of management and board members through our various contacts around the world. Management recruitment and
retention is also an important part of our Corporate Restructuring Services and these services often overlap.
WEBSITE DESIGN AND DEVELOPMENT
We recognize that in these
times, successful businesses must have comprehensive and professional internet profiles, interactive websites and excellent feedback
mechanisms. We will assist our clients in this area by recommending third party consultants and organizations to design, develop
and manage their websites and social networking capabilities.
INVESTOR AND PUBLIC RELATIONS
Since our clients and
future clients will likely desire to have their shares listed or continue to be listed on a stock exchange or quoted on one of
the quotation bureaus, we will advise our clients on the necessary requirements for communicating with their equity holders and
stake holders, their customers and potential customers. We will assist our clients in this area by recommending third party financial
professionals and investor relations and public relations organizations to provide them with such services.
REGULATORY COMPLIANCE
We are organizing a cadre
of third party securities attorneys and accountants to assist our clients with their compliance with the many reporting and other
requirements of stock exchanges, quotation bureaus and securities regulatory agencies and organizations in the states and countries
where their shares will be or are listed.
EXCHANGE LISTINGS
We also assist our clients
with the selection of stock exchanges that may be suitable to our clients. Various exchanges have listing requirements and standards
that vary from one exchange to another. Typical listing requirements and standards relate to a number of things, such as pre-tax
income, cash flows, revenue, net tangible assets, market value of a company’s listed securities, minimum trading prices
of a company’s securities, minimum shareholders’ equity, operating history, number of shareholders, number of market
makers, and corporate governance. We will try to identify appropriate exchanges for our clients based on the particular client’s
operating history, pre-tax income, cash flow, revenue, net tangible assets, shareholder base and other factors described above.
We will assist our clients
with retention of attorneys and accountants having experience with publicly held companies and stock exchanges in various countries.
We will also assist our clients in locating market makers, investment bankers and broker-dealers to assist them with accessing
capital markets.
INTRODUCTIONS TO FINANCIERS
After reviewing the business
plans, prospects and problems that are unique to each of our clients, we will use our best efforts to introduce our clients to
various third party financial resources around the world who may be able to assist them with their capital funding requirements.
As used throughout this
Annual Report, references to “Global Equity International,” “GEI,” “Company,” “we,”
“our,” “ours,” and “us” refer to Global Equity International, Inc. and our subsidiaries, unless
the context otherwise requires. In addition, references to “financial statements” are to our consolidated financial
statements contained herein, except as the context otherwise requires. References to “fiscal year” are to our fiscal
year which ends on December 31 of each calendar year. Unless otherwise indicated, the terms “Common Stock,” “common
stock” and “shares” refer to our shares of $.001 par value, common stock.
HISTORICAL BUSINESS TRANSACTED
BUSINESS TRANSACTED IN 2010
GEP completed two transactions in 2010.
M1 Luxembourg AG, through
its subsidiaries, offers financial advisory services. The firm’s subsidiaries include Cannon Regus, Sumner Holdings, ISIS
financial Associates Ltd, Britannia Overseas Property, and M1 Lux (Cyprus) Ltd. It provides mortgage, private banking, company
formation, real estate management and trust formation advisory services. Additionally, the firm offers property documentation,
education fees planning, retirement planning, healthcare insurance policies and private wealth management advisory services. M1
Luxembourg A.G. is headquartered in Hunenberg, Switzerland.
Our contract with M1 Luxembourg
AG originally called for us to receive a cash fee of $200,000. However, we renegotiated our fee to take 2,000,000 shares of the
client’s common stock, valued at $1,086,160, an amount substantially in excess of the $200,000 in fees payable to us, due
to the fact that the shares of M1 Luxembourg AG were thinly traded and subject to highly volatile price fluctuations and we had
no guarantee they would continue to be listed. Our total fees received from M1 Luxembourg AG in 2010 represented approximately
52.7% of our gross revenues for 2010.
On November 15, 2011,
M1 Luxembourg AG’s shares were delisted from the Frankfurt Open Market when it fell out of compliance with the capital adequacy
rules of the Frankfurt Open Market. M1 Luxembourg AG’s shares are no longer quoted on the Frankfurt Open Market. M1 Luxembourg
is still in business. However, since its shares are no longer quoted, we will have to write-down the value of this asset in the
fourth quarter of 2011 to $0. The resulting accounting loss on our M1 Luxembourg AG shares was $1,086,160 and was accounted for
in our audited financial statements for the fiscal year ended December 31, 2011.
|
(2)
|
MONKEY
ROCK GROUP INC.
|
Monkey Rock Group Inc.
(MKRO), a United States company operated by two British nationals. Monkey Rock initially focused on organizing motorbike events,
such as Sturgis, South Dakota, which is one of the largest gatherings of bikers in the world with an average of 400,000 bikers
participating. GEP was engaged by Monkey Rock to assist it in expanding in Europe and to assist with branding and marketing. GEP
introduced Monkey Rock to Brand Union, a division of WPP, one of the largest advertising firms in the world.
BUSINESS TRANSACTED IN 2011
In 2011, we initially
had contracts with three companies: (1) RFC K.K., a Japan based company; (2) Black Swan Data Limited, a United Kingdom based company;
and (3) Arrow Cars SL, a company based in Spain. In addition, we entered into another contract on December 12, 2011 with Voz Mobile
Cloud Ltd, a U.S. corporation, and we concluded our work on that contract on December 31, 2011.
RFC K.K. has been in business
for a little over three years and they are in the online race simulation business. RFC K.K. has engaged us to assist them in their
expansion into the Middle Eastern and Asian markets. We have arranged meetings between RFC K.K. and a few high profile, potential
Dubai based partners/investors. As of this time, RFC K.K. has not entered into any agreements with these potential Dubai partners/investors,
but has entered into preliminary, non-binding verbal agreements with the Shanghai local government and Ferrari to set up a Race
Fight Club in Shanghai, Peoples Republic of China.
We entered into our contract
with RFC K.K. on October 19, 2011. We have contracted to provide the following services to RFC K.K.:
|
●
|
Act
as a corporate finance advisor in connection with an acquisition of a target business;
|
|
●
|
Advise
the client on the structure of the acquisition and assist the client in the preparation and authorization of documentation;
|
|
●
|
Use
reasonable efforts through our marketing and public relations contacts to support and market the acquisition of a target business,
including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and
advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be
necessary to accomplish an acquisition of a target business.
|
A “target business”
would be a company having a business plan that is compatible with RFC K.K.’s business because it has a similar business
to RFC K.K. and have net assets, net profits and projected growth that would be suitable for RFC K.K. and that, if combined with
RFC K.K., could help RFC K.K. grow its business and ultimately meet various requirements or standards for having RFC K.K.’s
shares listed on an exchange or quoted on a stock quotation medium. At this time, RFC K.K. has not decided on a particular exchange
or identified any particular target business.
We have received $60,000
under this contract so far and have nine more payments due to us at $20,000 each.
As of December 31, 2013,
this Company is no longer a client. We did not receive any further cash or stock compensation.
|
(2)
|
BLACK
SWAN DATA LIMITED
|
Black Swan Data Limited
is a United Kingdom based company (“Black Swan”) that has developed algorithm based artificial intelligence that audits
and merges internal and external data feeds from various sources, such as sales and transactional data, web and mobile statistics,
consumer services data, social network analysis and customer relationship management databases.
We entered into our contract
with Black Swan Data Limited on July 28, 2011. We have contracted to provide the following services to Black Swan Data Limited:
|
●
|
Act
as a corporate finance advisor in connection with an acquisition of a target business;
|
|
●
|
Advise
the client on the structure of the acquisition and assist the client in the preparation and authorization of documentation;
|
|
●
|
Use
reasonable efforts through our marketing and public relations contacts to support and market the acquisition of a target business,
including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and
advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be
necessary to accomplish an acquisition of a target business; and
|
|
●
|
Introduce
the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client
with having its shares listed on a stock exchange or having its shares quoted on a stock quotation medium.
|
A “target business”
would be a company having a business plan that is compatible with Black Swan Data Limited’s business because it has a similar
business to Black Swan Data Limited, and having net tangible assets, net profits and projected growth that would be suitable for
Black Swan Data Limited and that, if combined with Black Swan Data Limited, could help Black Swan Data Limited grow its business
and ultimately meet the various requirements or standards for having Black Swan Data Limited’s shares listed on an exchange
or quoted on a stock quotation medium. At this time, Black Swan Data Limited has not decided on a particular exchange or target
business.
Black Swan Data Limited
paid us $40,000 has been paid under this contract.
As of December 31, 2013,
this Company is no longer a client. We did not receive and further cash or stock compensation.
|
(3)
|
ARROW
CARS SL / ARROW CARS INTERNATIONAL INC.
|
Arrow Cars SL is currently
based in southern Spain and has been in business since 2008. Arrow Cars SL is a national rent a car business operating only in
Spain. Arrow Cars SL has engaged us to consult with them and to design a three year strategy to expand their business model into
other high density tourist areas of Spain, Portugal and southern France, with the objective of opening a similar business in the
United States, primarily in Florida.
We entered into our contract
with Arrow Cars SL on January 14, 2011. We have contracted to provide the following services to Arrow Cars SL:
|
●
|
Act
as a corporate finance advisor in connection with an acquisition of a target business;
|
|
●
|
Advise
the client on the structure of the acquisition and assist the client in the preparation and authorization of documentation;
|
|
●
|
Use
reasonable efforts through our marketing and public relations contacts to support and market the acquisition of a target business,
including: (i) where appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and
advisors in negotiating definitive documentation; and (iii) otherwise assist the client with such other actions as may be
necessary to accomplish an acquisition of a target business.
|
A “target business”
would be a company having a business plan that is compatible with Arrow Cars SL’s business because it has a business similar
to Arrow Cars SL, and having net tangible assets, net profits and projected growth that would be suitable for Arrow Cars SL and
that, if combined with Arrow Cars SL, could help Arrow Cars SL grow its business and to ultimately meet various requirements or
standards for having Arrow Cars SL’s shares listed on an exchange or quoted on a stock quotation medium. At this time, Arrow
Cars SL has not decided on a particular exchange or a target business.
Arrow Cars SL agreed to
pay us an initial fee of $20,000 and then an additional aggregate fee of $115,000 over the subsequent twelve months. Arrow Cars
has paid us $135,000 through December 31, 2012. In addition, we will receive a 10% equity stake in Arrow Cars SL in the event
we assist Arrow Cars SL in acquiring a target business.
As of December 31, 2013,
this Company has paid all cash and stock that was contractually agreed.
On December 12, 2011,
we entered into a contract with Voz Mobile Cloud Ltd, a “voice to mail” technology company based in the U.S. We consulted
with Voz Mobile Cloud Ltd on corporate restructuring, and we concluded our work on that contract on December 31, 2011. As compensation,
we received 2,000,000 shares of Voz Mobile Cloud Ltd common stock, which we valued at $100,000 in the fourth quarter of 2011.
As of December 31, 2013,
this Company is no longer a client
|
(5)
|
DIRECT
CCTV / DIRECT SECURITY INTEGRATION INC.
|
On March 31, 2011, we
entered into a contract with Direct Security Integration Inc. and its U.K. subsidiaries (“Direct CCTV”), which are
engaged in the business of installing closed circuit television and other security equipment. Direct CCTV is based in the U.S.
and also in the United Kingdom.
We have contracted to
provide Direct CCTV the following services:
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●
|
Act
as a corporate finance advisor to Direct CCTV;
|
|
●
|
Advise
the client on the structure of the acquisition and assist the client in the preparation and authorization of documentation;
|
|
●
|
Use
reasonable efforts through our marketing and public relations contacts to support and market Direct CCTV, including: (i) where
appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating
definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish
organic and inorganic growth; and
|
|
●
|
Introduce
the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client
with having its shares listed on the NASDAQ OTCBB
|
Direct CCTV agreed to
pay us $240,000 and to date we have been paid in full. In addition, we have agreed that we will receive a 10% equity stake in
Direct CCTV upon Direct CCTV’s shares being quoted on the NASDAQ OTCBB.
As of December 31, 2013,
this Company has paid all cash and stock that was contractually agreed.
NEW BUSINESS TRANSACTED IN 2012
At the beginning of 2012,
we had contracts with five companies: (1) RFC K.K., a Japan based company; (2) Black Swan Data Limited, a United Kingdom based
company; (3) Arrow Cars SL, (now called Arrow Cars International Inc.), a company based in Spain; and (4) Voz Mobile Cloud Ltd.,
a U.S. corporation and (5) Direct CCTV / Direct Security Integration Inc., a UK and US based company.
During 2012, we gained
the following clients:
On May 25, 2012, we entered
into a contract with Regis Card Limited (“Regis”), a “Pre-Paid” credit card company based in the U.S.
and in the United Kingdom.
We have contracted to
provide Regis the following services:
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●
|
Act
as a corporate finance advisor to Regis;
|
|
●
|
Advise
the client on the structure of the acquisition and assist the client in the preparation and authorization of documentation;
|
|
●
|
Use
reasonable efforts through our marketing and public relations contacts to support and market Regis, including: (i) where appropriate,
arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating definitive
documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish organic and
inorganic growth; and
|
|
●
|
Introduce
the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client
with having its shares listed on the Dubai NASDAQ.
|
Regis agreed to pay us
$250,000 and to date we have been paid a total of $150,000. In addition, we have agreed that we will receive a 10% equity stake
in the company upon listing Regis on the Dubai NASDAQ.
|
(2)
|
BTI
/ SCORPION PERFORMANCE INC.
|
On December 5, 2012, we
entered into a contract with Scorpion Performance Inc. (Scorpion”), a U.S. corporation based in Ocala, Florida. Scorpion
manufactures precision metal performance engine components and also precision medical instruments.
We have contracted to
provide Scorpion the following services:
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●
|
Act
as a corporate finance advisor to Scorpion;
|
|
●
|
Advise
the client on the structure of the acquisition and assist the client in the preparation and authorization of documentation;
|
|
●
|
Use
reasonable efforts through our marketing and public relations contacts to support and market Scorpion, including: (i) where
appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating
definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish
organic and inorganic growth; and
|
|
●
|
Introduce
the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client
with having its shares listed on the Dubai NASDAQ.
|
Scorpion agreed to pay
us $350,000 and to date we have been paid $180,000. In addition, we have agreed that we will receive a 6% equity stake in Scorpion
upon its initial public offering on the Dubai NASDAQ.
|
(3)
|
UNIVERSAL
ENERGY SOLUTIONS BV
|
Universal Energy Solutions
BV, a Dutch green energy company, that desires to list its stock on the Dubai Nasdaq, but first requires our Company to source
a Dubai sponsor that would agree to underwrite and sponsor the proposed public listing. We agreed to a fee of $10,000 and has
been paid in full. We have subsequently sourced an appropriate Dubai sponsor the client decided not to pursue the public listing
in the Dubai NASDAQ.
Innoveas AG., a German
technology incubator that wishes to also list its shares on the Dubai Nasdaq but as before also requires our Company to source
a Dubai sponsor that would be in agreement to underwrite and sponsor the proposed public listing. We agreed to a fee of $10,000
and has been paid in full. We have subsequently sourced an appropriate Dubai sponsor but the client decided not to pursue the
public listing in the Dubai NASDAQ.
|
(5)
|
ARABIAN
NUBIAN RESOURCES LIMITED
|
Arabian Nubian Resources
Limited, a United Kingdom based company that has mining contacts in North East Africa that wishes to list its shares on the Dubai
Nasdaq but as before also requires our Company to source a Dubai sponsor that would be in agreement to underwrite and sponsor
the proposed public listing. We agreed to a fee of $10,000 and have been paid in full. We were unable to source a sponsor in Dubai
for this company hence the company decided not to peruse the public listing in the Dubai NASDAQ.
NEW BUSINESS TRANSACTED IN 2013
At the beginning of 2013,
we already had contracts with five companies: (1) Arrow Cars International Inc., a company based in Spain and the US; and (2)
Voz Mobile Cloud Ltd., a U.S. corporation, (3) Direct CCTV / Direct Security Integration Inc., a U.K. and U.S. based company,
(4) BTI / Scorpion Performance Inc. based in the U.S., and (5) Direct CCTV / Direct Security Integration Inc., a U.K. and U.S.
based company.
During 2013, we gained
the following clients:
|
(1)
|
SCANDINAVIAN
AGRITEX CO. LIMITED
|
Scandinavian Agritex Co.
Limited is a United Kingdom based company that is a green “Agriculture Technology and Textile” company whose business
is situated in Sri-Lanka, Norway and the United Kingdom whose main purpose to develop and rapidly expand the organic cotton industry
in the country. Scandinavian Agritex Co. Limited was founded by textile professionals, fashion brand owners, and finance people
with significant international management experience. SAC has an extensive management team comprised of highly skilled and competent
agronomists, farmers and textile professionals. The Company´s long term objective is to operate the entire textile value
chain, including cultivation of cotton, ginning, spinning, weaving, garment manufacture, fashion and retail, with the objective
of retaining control and generating significant margins on each step of the chain. Furthermore, the Company intends to produce
organic cotton fabrics to be used in the sustainable clothing lines of well-known fashion brands and retailers.
We have contracted to
provide Scorpion the following services:
|
●
|
Act
as a corporate finance advisor to Scandinavian Agritex Co. Limited;
|
|
●
|
Advise
the client on the structure of the acquisition and assist the client in the preparation and authorization of documentation;
|
|
●
|
Use
reasonable efforts through our marketing and public relations contacts to support and market Scorpion, including: (i) where
appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating
definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish
organic and inorganic growth; and
|
|
●
|
Introduce
the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client
with having its shares listed on the Dubai NASDAQ.
|
Scandinavian Agritex Co.
Limited agreed to pay us $400,000 and to date we have been paid $210,000. In addition, we have agreed that we will receive a 6%
equity stake in Scorpion upon its initial public offering on the Dubai NASDAQ.
OUR BUSINESS IN 2014
We have three distinct
divisions (none of which will be treated as a segment for financial reporting purposes):
1. Introducers Network.
We have developed and continue to develop a number of finance professionals, accountants, attorneys and financial advisers who
will introduce us to their clients. We will review businesses introduced to us through these introducers and we will compensate
them on sum “to be determined” based on the event that we are engaged by to assist the companies they introduce to
us.
2. Project Review. Our
management team and advisors will carefully review and vet each business plan and opportunity submitted to us. Our management
team and advisors will determine which services we can offer these clients and assess the potential propositions to best assist
our clients in achieving their goals.
3. Placing. Working with
our business associates in Dubai, Europe and the United States, we will use our best efforts to assist our clients with listings
on stock exchanges in these cities in order to maximize their exposure to capital markets and to access funding via debt and equity
offerings.
FUTURE PLANS
MILESTONES FOR 2014/2015:
Our specific plan of operations
and milestones through March 2015 are as follows:
|
1)
|
DEVELOP
THE INTRODUCER NETWORK FURTHER AND IN HOPES 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)
|
Certain
registered investment houses in London (United Kingdom).
|
|
(2)
|
An
Austrian management consultancy firm based in Vienna (Austria).
|
|
(3)
|
Various
investment banks based in Dubai (UAE)
|
|
(4)
|
Certain
Private Banks based in Amsterdam (Holland) and Zurich in Switzerland.
|
|
(5)
|
The
Colombo Stock Exchange in Sri Lanka.
|
|
(6)
|
Various
family offices in Dubai (UAE).
|
We do not have any verbal
or written agreements with the firms identified above, as our relationship with each of them has been developed over the past
year or so.
We intend to develop relationships
with a further six “introducers” to potential new business for the Company before the end of June 2014.
We will continue to establish
a firm presence in Dubai, UAE where we are attracting clients, relationships and awareness. Our Dubai operation is currently a
branch office of the company allowing us a license to trade in the area. This branch office will continue to recruit new members
of staff that will allow us to grow and become more efficient in Dubai.
|
3)
|
CREATE
A MORE EFFICIENT SYSTEM FOR REVIEWING PROSPECTIVE BUSINESSES.
|
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.
We will create a deeper
due diligence program allowing us to dig deep on any prospective client prior to engagement thus protecting the company from any
future problems by employing one new staff member that will be responsible for the due diligence analysis and creating a report
for our file on their findings.
|
4)
|
EXPAND
OUR CONSULTANCY TO INCLUDE MORE MERGER AND ACQUISITION ACTIVITY.
|
We intend to form relationships
with merger and acquisition specialists during 2014 which will hopefully enable us to:
|
(1)
|
Find
potential merger and acquisition candidates.
|
|
(2)
|
Introduce
our clients to brokers and investment bankers.
|
|
(3)
|
Introduce
our clients to the appropriate professionals (attorneys and accountants) to assist them
in a public offering or exchange listing.
|
The only additional cost
for this activity will be a very small administrative burden for telephone calls and communications to be funded out of operational
income, mainly income receivable from clients currently under contract.
|
5)
|
DEVELOP
IN HOUSE IT DEPARTMENT
|
Commencing initially
with one member we will start to develop a proprietary program allowing us to easily monitor a client’s development status
and work in progress. We will also use this tool to manage our pipeline of clients and therefore it will become vital in our cash
flow forecasting.
In 2014, we intend to
become one of the first foreign companies to dual list on Dubai NASDAQ; our plan is to carry out a public relations campaign alongside
the dual listing process with the public relations firm we have selected with a view to prepare a campaign that will have a maximum
effect.
|
7)
|
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. 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.
At present we are being
received with open arms by the Dubai and Middle Eastern financial community; hence we have plans to host various hospitality events
for our current clients, our key contacts and upper management of the company.
|
8)
|
EXPAND
OUR RANGE OF BUSINESS AND CONTACTS
|
We intend to take our
consultancy service outside of the Middle East and Europe into Asia and Sri Lanka. We will expand on a ‘Commission Only’ basis
for the individuals or companies who take on our service to offer to their clients. Accountants, lawyers and finance professionals
are the target market for overlaying our service into their existing client banks in return for a percentage of fees received.
We also intend to add at least one new member to our administration team within the first quarter of 2014.
We will continue the “Road
shows”, in Dubai with the support of the Dubai NASDAQ for companies already listed in Sri Lanka and other parts of Asia
who could be seeking a dual listing in Dubai to provide liquidity and more capital raising options. We have commenced initial
conversations with a brokerage house in Sri Lanka to look at their clients they have that would be suitable for the Dubai market.
We will initially invite management of selected companies to Dubai for a two day event in conjunction with Nasdaq Dubai and a
number of leading Investment Institutions, the anticipated cost of this is to be met by the prospective clients themselves and
sponsorship from the institutions and Nasdaq Dubai.
|
10)
|
FURTHER
EXPAND OUR RANGE OF BUSINESS AND CONTACTS
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The foundation for this
development has been created in 2013. In 2014, we intend to cement in the relationships created. The target markets for attracting
clients are: Thailand, Sri Lanka, China, Hong Kong and Singapore
To service the clients
generated from these markets we will spend time creating a network of service companies who we can utilize to assist us on a local
basis. We will explore the possibilities of dual listings for our clients in Singapore to allow us a local market for any Asian
clients we will attract and giving the company a firm foothold in the Asian territory.
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11)
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EMPLOYEES;
IDENTIFICATION OF A SIGNIFICANT EMPLOYEE
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We currently have four
employees: Peter J. Smith, Enzo Taddei, Patrick V. Dolan and Zara V. Clark. Peter J. Smith, our President, and Enzo Taddei, our
Chief Financial Officer and Patrick V. Dolan, new business managing director, and Zara V. Clark, our Dubai office manager, each
have an employment agreement with the Company. All are full time employees of the Company. We intend to hire additional employees
in 2014, such as an in-house analyst in Dubai and a person to assist our new business managing director in London.
COMPETITION
We face intense competition
in every aspect of our business, and particularly from other firms which offer management, compliance and other consulting services
to private and public companies. We would prefer to accept a relatively low cash component as our fee for management consulting
and regulatory compliance services and take a greater portion of our fee in the form of restricted shares of our private clients’
common stock. We also face competition from a large number of consulting firms, investment banks, venture capitalists, merchant
banks, financial advisors and other management consulting and regulatory compliance services firms similar to ours. Many of our
competitors have greater financial and management resources and some have greater market recognition than we do.
REGULATORY REQUIREMENTS
We are not required to
obtain any special licenses, nor meet any special regulatory requirements before establishing our business, other than a simple
business license. If new government regulations, laws, or licensing requirements are passed that would restrict or eliminate delivery
of any of our intended products, then our business may suffer. Presently, to the best of our knowledge, no such regulations, laws,
or licensing requirements exist or are likely to be implemented in the near future that would reasonably be expected to have a
material impact on or sales, revenues, or income from our business operations.
We are not a broker-dealer.
We do not believe we are an investment adviser or an investment company. We are not a hedge fund or a mutual fund or any similar
type of fund. We are primarily an operating business that offers and performs corporate consultancy services.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL
REGULATIONS
The Company’s common
stock is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“1934 Act”). As a result of
such registration, the Company is subject to Regulation 14A of the “1934 Act,” which regulates proxy solicitations.
Section 14(a) requires all companies with securities registered pursuant to Section 12(g) thereof to comply with the rules and
regulations of the Commission regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to stockholders
of the Company at a special or annual meeting thereof or pursuant to a written consent will require the Company to provide its
stockholders with the information outlined in Schedules 14A or 14C of Regulation 14; preliminary copies of this information must
be submitted to the Commission at least 10 days prior to the date that definitive copies of this information are forwarded to
stockholders.
The Company is also required
to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the Commission on a regular basis, and will be required
to disclose certain events in a timely manner, (e.g., changes in corporate control; acquisitions or dispositions of a significant
amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on Form 8-K.
WE ARE SUBJECT TO THE
REQUIREMENTS OF SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002. IF WE ARE UNABLE TO TIMELY COMPLY WITH SECTION 404 OR IF THE COSTS
RELATED TO COMPLIANCE ARE SIGNIFICANT, OUR PROFITABILITY, STOCK PRICE AND RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD
BE MATERIALLY ADVERSELY AFFECTED.
The Company is required
to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002, which requires that we document and test our internal
controls and certify that we are responsible for maintaining an adequate system of internal control procedures for the 2014 fiscal
year. We are currently evaluating our existing controls against the standards adopted by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). During the course of our ongoing evaluation and integration of the internal controls of our
business, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues
identified through this review (see Item 9A, below for a discussion of our internal controls and procedures).
We believe that the out-of-pocket
costs, the diversion of management’s attention from running the day-to-day operations and operational changes caused by
the need to comply with the requirement of Section 404 of the Sarbanes-Oxley Act could be significant. If the time and costs associated
with such compliance exceed our current expectations, our results of operations and the future filings of our Company could be
materially adversely affected.
DEPENDENCE ON KEY EMPLOYEES
The Company is heavily
dependent on the ability of our President, Peter Smith, our Chief Financial Officer, Enzo Taddei and our new business managing
director, Patrick V. Dolan. The loss of the services of Mr. Smith, Mr. Taddei or Mr. Dolan would seriously undermine our ability
to carry out our business plan.
In the event of future
growth in administration, marketing, manufacturing and customer support functions, the Company may have to increase the depth
and experience of its management team by adding new members. The Company’s success will depend to a large degree upon the
active participation of its key officers and employees, as well as the continued service of its key management personnel and its
ability to identify, hire, and retain additional qualified personnel. There can be no assurance that the Company will be able
to recruit such qualified personnel to enable it to conduct its proposed business successfully.
REPORTS TO SECURITY HOLDERS
The public may view and
obtain copies of the Company’s reports, as filed with the Securities and Exchange Commission, at the SEC’s Public
Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Information on the Public Reference Room is available by
calling the SEC at 1-800-SEC-0330 1-800-SEC-0330 FREE. Additionally, copies of the Company’s reports are available
and can be accessed and downloaded via the internet on the SEC’s internet site at http://www.sec.gov.
ITEM 1A. RISK FACTORS.
An investment in our Common
Stock involves a high degree of risk. Prospective investors should carefully consider the following risk factors and the other
information in this Annual Report and in our other filings with the SEC before investing in our Common Stock. Our business and
results of operations could be seriously harmed by any of the following risks. You should carefully consider the risks described
below, the other information in this Annual Report and the documents incorporated by reference herein when evaluating our Company
and our business. If any of the following risks actually occurs, our business could be harmed. In such case, the trading price
of our Common Stock could decline and investors could lose all or a part of the money paid for our Common Stock.
INVESTING IN OUR COMMON
STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF THE FOLLOWING RISKS ACTUALLY MATERIALIZES, OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS WOULD SUFFER AND OUR SHAREHOLDERS COULD LOSE ALL OR PART OF THEIR INVESTMENT IN OUR SHARES.
RISKS ASSOCIATED WITH OUR COMPANY
WHILE WE HAVE A LITTLE
OVER THREE YEARS OF OPERATING HISTORY. THERE IS NO ASSURANCE THAT OUR FUTURE OPERATIONS WILL RESULT IN PROFITABLE REVENUES. IF
WE CANNOT GENERATE SUFFICIENT REVENUES TO OPERATE PROFITABLY, WE WILL CEASE OPERATIONS AND YOU WILL LOSE YOUR INVESTMENT.
We were incorporated in
Nevada on October 1, 2010, and our wholly-owned subsidiary, GE Partners Plc., was formed on September 2, 2009. For the fiscal
year ended December 31, 2013, we incurred a net loss from operations of $2,344,958 and which included a realized loss on impairment
of marketable securities of $160,000 and stock compensation to the Company´s CEO, CFO and New Business managing Director
valued at $540,000.
If we cannot generate
sufficient revenues to operate profitably, we will cease operations and you will lose your investment in our Company. Our ability
to achieve and maintain profitability and positive cash flow is dependent, among other things, upon:
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●
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our
ability to attract clients who will buy our services from us; and
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●
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our
ability to generate revenues through the sale of our services.
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BECAUSE OUR AUDITORS
HAVE ISSUED A GOING CONCERN OPINION, THERE IS SUBSTANTIAL UNCERTAINTY THAT WE WILL CONTINUE OPERATIONS IN WHICH CASE INVESTORS
COULD LOSE THEIR INVESTMENTS IN OUR COMMON STOCK.
Our auditors have issued
a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve
months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue
in business. As such, we may have to cease operations and you could lose your investment.
WE ARE AN “EMERGING
GROWTH COMPANY” AND WE CANNOT BE CERTAIN IF WE WILL BE ABLE TO MAINTAIN SUCH STATUS OR IF THE REDUCED DISCLOSURE REQUIREMENTS
APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.
We are an “emerging
growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 or “JOBS Act,” and we may adopt
certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirement of holding a nonbinding advisory vote on executive and stockholder
approval of any golden parachute payments not previously approved. We may remain an “emerging growth company” for
up to five full fiscal years following our initial public offering. We would cease to be an emerging growth company, and, therefore,
ineligible to rely on the above exemptions, if we have more than $1 billion in annual revenue in a fiscal year, if we issue more
than $1 billion of non-convertible debt over a three-year period, or if we have more than $700 million in market value of our
common stock held by non-affiliates as of June 30 in the fiscal year before the end of the five full fiscal years. Additionally,
we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors
find our common stock less attractive as a result of our reduced disclosures, there may be less active trading in our common stock
(assuming a market ever develops) and our stock price may be more volatile.
AS A RESULT OF OUR
INTENSELY COMPETITIVE INDUSTRY, WE MAY NOT GAIN ENOUGH MARKET SHARE TO BE PROFITABLE.
The corporate consulting
business is intensely competitive and due to our small size and limited resources, we may be at a competitive disadvantage, especially
as a public company. There are several firms offering similar services. Many of our competitors have proven track records and
substantial human and financial resources, as opposed to our Company who has limited human resources and little cash. Also, the
financial burden of being a public company, which will cost us approximately $40,000 per year in auditing fees and legal fees
to comply with our reporting obligations under the Securities Exchange Act of 1934 and compliance with the Sarbanes-Oxley Act
of 2002, will strain our finances and stretch our human resources to the extent that we may have to price our Consultancy service
fees higher than our non-publicly held competitors just to cover the costs of being a public company.
WE ARE VULNERABLE TO
THE CURRENT ECONOMIC CRISIS WHICH MAY NEGATIVELY AFFECT OUR PROFITABILITY AND ABILITY TO CARRY OUT OUR BUSINESS PLAN.
We are currently in a
severe worldwide economic recession. Runaway deficit spending by the United States government and other countries further exacerbates
the United States and worldwide economic climate and may delay or possibly deepen the current recession. Currently, a lot of economic
indicators such as rising gasoline and commodity prices suggest higher inflation, dwindling consumer confidence and substantially
higher taxes. Demand for the services we offer tends to decline during recessionary periods when disposable revenue is lower and
may impact sales of our services. In addition, sudden disruptions in business conditions as a result of a terrorist attack similar
to the events of September 11, 2001, including further attacks, retaliation and the threat of further attacks or retaliation,
war, civil unrest in the Middle East, adverse weather conditions or other natural disasters, such as Hurricane Katrina, pandemic
situations or large scale power outages can have a short term or, sometimes, long term impact on spending. The worldwide recession
is placing severe constraints on the ability of all companies, particularly smaller ones, to raise capital, borrow money, and
operate effectively and profitably and to plan for the future. The recent trauma in the Cyprus banking and debt crisis is likely
to expand to other companies in the region and could potentially have a negative impact on our European clients and operations.
BECAUSE PETER J. SMITH,
OUR PRESIDENT, OWNS 52.61% OF OUR TOTAL OUTSTANDING COMMON STOCK AND 1,200,000 (60.50%) SHARES OF OUR TOTAL OUTSTANDING PREFERRED
STOCK, MR. SMITH WILL RETAIN CONTROL OF US AND WILL BE ABLE TO DECIDE WHO WILL BE DIRECTORS AND YOU MAY NOT BE ABLE TO ELECT ANY
DIRECTORS WHICH COULD DECREASE THE PRICE AND MARKETABILITY OF OUR SHARES.
Peter J. Smith, our President,
owns 52.61% of our total outstanding common stock and 60,50% of our total outstanding preferred stock. As a result, Peter J. Smith
will own the vast majority of the shares of our Common Stock, a majority of the shares of our preferred stock and super-voting
rights attributable to his preferred stock, which allow him to cast two (2) votes per share of preferred stock and he will be
able to elect all of our directors and control our operations, which could decrease the price and marketability of our shares.
BECAUSE OUR BUSINESS
MODEL ANTICIPATES OUR RECEIVING EQUITY STAKES IN OUR CLIENTS, MOST OF WHOM WILL BE DEVELOPMENT STAGE COMPANIES, WE MAY NOT BE
ABLE TO RESELL SUCH EQUITY AT SUITABLE PRICES, IF AT ALL, WHICH COULD MATERIALLY IMPACT OUR EARNINGS AND ABILITY TO REMAIN IN
BUSINESS.
Our business model anticipates
that we will receive, as partial compensation for our consulting services, equity stakes in our clients, many of whom will be
development stage companies. We will have to value those equity stakes at the time we receive them. Investments in development
stage companies are risky because many of such companies’ securities are illiquid, thinly traded (if at all) and the value
of such securities will be subject to adjustments should the value of such securities decline, should such securities be delisted
from an exchange or cease being quoted on a stock quotation medium or should such businesses fail, which could cause us to write-down
or write-off the value of such securities and result in a negative impact to our earnings and possibly cause us to cease or curtail
our operations.
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On
November 15, 2011, the shares of one of our clients, M1 Luxembourg AG, were delisted
from the Frankfurt Open Market, resulting in a $1,086,160 loss on the value of our shares
in M1 Luxembourg AG.
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On
September 30, 2012, the shares of another of our clients, Monkey Rock Group Inc. were
demoted to the Pink Sheets from the OTCQB, resulting in a $975,000 loss on the value
of our shares in Monkey Rock Group Inc.
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On
June 30, 2013, there were identifiable events or changes in circumstances that had a
significant adverse effect on the value of our investments in Voz Mobile Cloud Limited
hence the Company impaired $160,000 of the investments.
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WE MAY BE SUBJECT TO
FURTHER GOVERNMENTAL REGULATION, INCLUDING THE INVESTMENT COMPANY ACT OF 1940, WHICH COULD ADVERSELY AFFECT OUR OPERATIONS.
As part of our business
model, GEP accepts equity securities in our clients as partial compensation for our services. Prior to 2012, 40% or more of our
income was derived from the receipt of equity securities and more than 40% of our assets were comprised of equity securities that
we received in exchange for some of our services. In 2012, only 9.85% of our income was derived from the receipt of equity securities.
As of December 31, 2013, 1% of our assets were comprised of equity securities.
Although we do not believe
we are engaged in the business of investing, reinvesting or trading in securities, and we do not currently hold ourselves out
to the public as being engaged in those activities, it is possible that we may be deemed to be an “inadvertent investment
company” under section 3(a)(1)(C) of the Investment Company Act of 1940, as amended (“ICA”), if more than 40%
of our future income and/or more than 40% of our assets are derived from “investment securities” (as defined in the
ICA), and if we are deemed to be, or perceived to be, primarily engaged in the business of investing, reinvesting or trading in
securities.
If we were deemed or found
to be an investment company by the Securities and Exchange Commission or a court of law, then we would face dire consequences
and a maze of additional regulatory obligations. For example, registered investment companies are subject to extensive, restrictive
and potentially adverse regulation relating to, among other things, operating methods, management, capital structure, dividends
and transactions with affiliates. If it were established that we are an unregistered investment company, there would be a risk,
among other material adverse consequences, that we could become subject to monetary penalties or injunctive relief, or both, in
an action by the SEC, that we would be unable to enforce contracts with third parties or that third parties with whom we have
contracts could seek to obtain rescission of transactions with us undertaken during the period it was established that we were
an unregistered investment company.
WE COULD BE SUBJECT
TO THE INVESTMENT ADVISERS ACT OF 1940, WHICH WOULD BE DETRIMENTAL TO OUR BUSINESS.
Although we do not believe
we are engaged in the investment advisory business and we do not hold ourselves out to be investment advisers, it is possible
that the SEC could deem or find us to be an unregistered investment adviser due to the types of consulting services offered by
us. If we were deemed or found to be an investment adviser by the Securities and Exchange Commission or a court of law, then we
would face dire consequences and a maze of additional regulatory obligations. For example, registered investment advisers are
subject to extensive, restrictive and potentially adverse regulation relating to, among other things, operating methods, fees,
management, capital structure, dividends and transactions with affiliates. If it were established that we are an unregistered
investment adviser, there would be a risk, among other material adverse consequences, that we could be become subject to monetary
penalties or injunctive relief, or both, in an action by the SEC, that we would be unable to enforce contracts with third parties
or that third parties with whom we have contracts could seek to obtain rescission of transactions with us undertaken during the
period it was established that we were an unregistered investment adviser.
OUR SHAREHOLDERS MAY
BE DILUTED SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN FINANCING, FUND OUR OPERATIONS AND SATISFY OUR OBLIGATIONS THROUGH ISSUANCE
OF ADDITIONAL SHARES OF OUR COMMON STOCK.
We will likely have to
issue additional shares of our Common Stock to fund our operations and to implement our plan of operation. Wherever possible,
our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the
non-cash consideration will consist of restricted shares of our common stock. Our board of directors has authority, without action
or vote of the shareholders, to issue all or part of the 38,955,798 authorized, but unissued, shares of our common stock. Future
issuances of shares of our common stock will result in dilution of the ownership interests of existing shareholders, may further
dilute common stock book value and that dilution may be material.
FINRA SALES PRACTICE
REQUIREMENTS MAY LIMIT A STOCKHOLDER’S ABILITY TO BUY AND SELL OUR STOCK.
The FINRA has adopted
rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing
that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax
status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high
probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing
the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny
stock transactions. As a result, fewer broker-dealers may be willing to make a market in our common stock, which may limit your
ability to buy and sell our stock.
OUR ARTICLES OF INCORPORATION
AUTHORIZE THE ISSUANCE OF PREFERRED STOCK.
Our Articles of Incorporation
authorizes the issuance of up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from
time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue
preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power
or other rights of the holders of the common stock. On November 30, 2011, the Company issued all 5,000,000 shares of our authorized
preferred stock to our Chief Executive Officer, Peter Smith.
On November 20, 2012,
the Board of Directors and Mr. Smith subsequently agreed that Mr. Smith would retire to treasury 3,466,668 of these Series “A”
preferred shares and retain, the balance, 1,533,332 shares. Mr. Smith subsequently gifted 400,000 of these Series “A”
preferred shares to Mr. Taddei (CFO of the Company) and a further 133,332 preferred shares to two other employees of the Company,
66,666 Series “A” preferred shares each.
On December 12, 2013 the
Company issued 450,000 Series “A” preferred shares to the Company’s CFO (200,000), CEO (200,000) and one employee
(50,000) having a fair value of $540,000 ($0.12 per share), based upon the fair value of the services rendered, which represented
the best evidence of fair value.
THIS ANNUAL REPORT
CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO US, OUR INDUSTRY AND TO OTHER BUSINESSES.
These forward-looking
statements in this Annual Report are based on the beliefs of our management, as well as assumptions made by and information currently
available to our management. When used in this Annual Report, the words “estimate,” “project,” “believe,”
“anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking
statements. These statements reflect our current views with respect to future events and are subject to risks and uncertainties
that may cause our actual results to differ materially from those contemplated in our forward-looking statements. We caution you
not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. We do
not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances
after the date of this Annual Report or to reflect the occurrence of unanticipated events.
ITEM 1B.
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UNRESOLVED
STAFF COMMENTS.
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Not applicable.
The Company does not own
any property. Our executive offices are located at X3 Jumeirah Bay, Office 3305, Jumeirah Lake Towers, Dubai, U.A.E.; this office
consists of 1,400 square feet of office space for which we pay a monthly rent of $2,500. We also have a satellite office located
in London based in another office in Level 17 Dashwood House, 69 Old Broad Street, London EC2M 1QS, United Kingdom. Peter J. Smith,
our President and Chief Executive Office, is based in Dubai and Enzo Taddei, our Chief Financial Officer, is based between Spain
and Dubai.
ITEM 3.
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LEGAL
PROCEEDINGS.
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We are not subject to
any legal proceedings and are not aware of any threatened legal proceedings.
ITEM 4.
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MINE
SAFETY DISCLOSURES.
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Not applicable.
PART
II
ITEM 5.
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MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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As of December 31, 2013,
the Company’s Common Stock was quoted on the Over-the-Counter Bulletin Board under the symbol “GEQU.OB.” The
market for the Company’s Common Stock is limited, volatile and sporadic and the price of the Company’s Common Stock
could be subject to wide fluctuations in response to quarterly variations in operating results, news announcements, trading volume,
sales of Common Stock by officers, directors and principal shareholders of the Company, general market trends, changes in the
supply and demand for the Company’s shares, and other factors. The following table sets forth the high and low sales prices
for each quarter relating to the Company’s Common Stock for the last two fiscal years. These quotations reflect inter-dealer
prices without retail mark-up, markdown, or commissions, and may not reflect actual transactions.
Fiscal 2013
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High
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Low
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First Quarter (1)
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$
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1.20
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$
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0.70
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Second Quarter (1)
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$
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0.97
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$
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0.10
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Third Quarter (1)
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$
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0.27
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$
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0.15
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Fourth Quarter (1)
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$
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0.45
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$
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0.10
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Fiscal 2012
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High
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Low
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First Quarter
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$
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--
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$
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--
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Second Quarter
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$
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--
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$
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--
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Third Quarter
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$
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--
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$
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--
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Fourth Quarter (1)
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$
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1.00
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$
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0.24
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(1)
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This
represents the closing bid information for the stock on the OTC Bulletin Board. The bid and ask quotations represent prices
between dealers and do not include retail markup, markdown or commission. They do not represent actual transactions and have
not been adjusted for stock dividends or splits.
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The Securities and Exchange
Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker
or dealer approve a person’s account for transactions in penny stocks and (ii) the broker or dealer receive from the investor
a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to
approve a person’s account for transactions in penny stocks, the broker or dealer must (i) obtain financial information
and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable
of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability determination and (ii) that the broker or dealer received
a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing
in penny stocks in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases
of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in penny stocks.
Shareholders should be
aware that, according to SEC Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or
a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching
of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups
by selling broker dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices
have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor
losses. The occurrence of these patterns or practices could increase the volatility of our share price.
Our management is aware
of the abuses that have occurred historically in the penny stock market.
HOLDERS.
As of
the date of this filing, there were 74 record holders of the 31,044,202 shares of the Company’s issued and outstanding Common
Stock.
DIVIDENDS.
The
Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future.
It is the present intention of management to utilize all available funds for the development of the Company’s business.
RECENT ISSUANCES OF UNREGISTERED SECURITIES
The Company originally
issued to Javan Khazali (a United States citizen) a total of 2,000,000 shares of common stock on October 28, 2010 at $.001 per
share (par value) for an aggregate consideration of $2,000.
SECURITIES ISSUED BETWEEN
NOVEMBER 1, 2010, AND SEPTEMBER 30, 2011 (WITHIN THE ONE-YEAR COMPLIANCE PERIOD APPLICABLE TO NON-REPORTING ISSUERS AS SET FORTH
IN CATEGORY 3 OF RULE 903 OF REGULATION S):
Effective November 1,
2010, the Company issued 5,000,000 shares of common stock to Enzo Taddei, an individual (non-“U.S. person” as defined
in Rule 902 of Regulation S), for accounting and financial modeling services rendered to Global Equity Partners PLC valued at
$5,000. Mr. Taddei became the Chief Financial Officer and a Director of the Company in September 2011.
On November 14, 2010,
the Company issued 1,000,000 shares of common stock to Miss Pilar Tardon, an accountant in Spain, and an individual (non-“U.S.
Person” as defined in Rule 902 of Regulation S), in exchange for professional services rendered to the Company and also
for an introduction commission. The professional services rendered related to financial restructuring of one of our current clients,
Arrow Cars SL; these services were valued at $25,000. Miss Tardon also submitted to the Company an invoice for a further $25,000
for her introduction of Arrow Cars SL. Therefore, the total value of Miss Tardon’s services were valued at $50,000 and paid
by our issuance to her of 1,000,000 shares of common stock.
The Company issued 20,000,000
shares of common stock to Peter Smith (a non-“U.S. Person” as defined in Rule 902 of Regulation S) pursuant to a Plan
and Agreement of Reorganization dated November 15, 2010, when the Company acquired 100% of the common stock of Global Equity Partners
PLC in a private transaction, resulting in Global Equity Partners PLC becoming a wholly-owned subsidiary of the Company. Following
the closing of this transaction, Peter Smith became our President and Chief Executive Officer and a member of our board of directors.
Effective December 31,
2010, the Company issued 668,000 shares of common stock to seven debt holders (none of whom was a “U.S. person” as
defined in Rule 902 of Regulation S), at various negotiated conversion rates ranging from $.36 to $.44 per share, in satisfaction
of $263,534 in debt owed by the Company, as follows:
Name of Creditor
|
|
Amount of Debt
|
|
|
No.
of
Shares Issued
|
|
|
Conversion
Price
|
|
William
& Lorraine Beveridge
|
|
$
|
7,089
|
|
|
|
16,000
|
|
|
|
$.44
per share
|
|
Brain
H. Coates
|
|
$
|
14,024
|
|
|
|
40,000
|
|
|
|
$.35
per share
|
|
Daycrest
Nominees Ltd.
|
|
$
|
26,952
|
|
|
|
70,000
|
|
|
|
$.39
per share
|
|
Barrie
Pearson Craig
|
|
$
|
7,440
|
|
|
|
20,000
|
|
|
|
$.37
per share
|
|
Samueal
M. Austin
|
|
$
|
4,435
|
|
|
|
12,000
|
|
|
|
$.37
per share
|
|
David
Baker
|
|
$
|
3,593
|
|
|
|
10,000
|
|
|
|
$.36
per share
|
|
Tohibu
Ou
|
|
$
|
200,000
|
|
|
|
500,000
|
|
|
|
$.40
per share
|
|
Totals
|
|
$
|
263,534
|
|
|
|
668,000
|
|
|
|
|
|
The conversion prices
of the above concurrent issuances of common stock were the product of negotiations by our management with each creditor. None
of the above creditors was a related party or related person to the Company. As a result of our negotiations with the above creditors,
no interest was included in the aggregate amounts settled.
Between May 2, 2011, and
June 15, 2011, the Company issued a total of 103,100 shares of common stock in a private offering to a total of 27 non-related
persons (non-“U.S. persons” as defined in Rule 902 of Regulation S) at $.50 per share for an aggregate consideration
of $51,550, as follows:
Name
|
|
Number
of Shares
|
|
|
Aggregate Purchase Amount
|
|
Mark
Bingham
|
|
|
500
|
|
|
$
|
250
|
|
Margaret
Cachart
|
|
|
1,000
|
|
|
$
|
500
|
|
Barry
Cotton
|
|
|
500
|
|
|
$
|
250
|
|
Adam
Divall
|
|
|
1,000
|
|
|
$
|
500
|
|
Jamie
Divall
|
|
|
1,000
|
|
|
$
|
500
|
|
Collin
Elliott
|
|
|
500
|
|
|
$
|
250
|
|
Michael
Guetjes
|
|
|
500
|
|
|
$
|
250
|
|
Peter
Lilley
|
|
|
1,000
|
|
|
$
|
500
|
|
Ian
McKenzie
|
|
|
1,000
|
|
|
$
|
500
|
|
Jamie
Palacios Vergara
|
|
|
1,000
|
|
|
$
|
500
|
|
Anthony
Preece
|
|
|
1,000
|
|
|
$
|
500
|
|
Michael
Ricks
|
|
|
500
|
|
|
$
|
250
|
|
Darren
Roberts
|
|
|
1,000
|
|
|
$
|
500
|
|
Wayne
Roberts
|
|
|
1,000
|
|
|
$
|
500
|
|
Toby
Roberts
|
|
|
1,000
|
|
|
$
|
500
|
|
Vicent
Samways
|
|
|
2,500
|
|
|
$
|
1,250
|
|
Gary
Steel
|
|
|
500
|
|
|
$
|
250
|
|
Jon
Stronell
|
|
|
1,000
|
|
|
$
|
500
|
|
Martin
Sweeny
|
|
|
500
|
|
|
$
|
250
|
|
Daniel
Tovey
|
|
|
2,000
|
|
|
$
|
1,000
|
|
Hayley
Wood
|
|
|
1,000
|
|
|
$
|
500
|
|
Caoimhe
Lonergan
|
|
|
5,000
|
|
|
$
|
2,500
|
|
Eibhlin
Lonergan
|
|
|
5,000
|
|
|
$
|
2,500
|
|
Saoirse
Lonergan
|
|
|
5,000
|
|
|
$
|
2,500
|
|
John
Lonergan
|
|
|
5,000
|
|
|
$
|
2,500
|
|
Brid
Lonergan
|
|
|
20,000
|
|
|
$
|
10,000
|
|
David
Lonergan
|
|
|
43,100
|
|
|
$
|
21,550
|
|
TOTALS
|
|
|
103,100
|
|
|
$
|
51,550
|
|
On September 23, 2011,
the Company issued 9,600 shares of common stock to Samuel James Cameron, an individual (a non-“U.S. Person” as defined
in Rule 902 of Regulation S), in exchange for marketing consultancy services rendered to the Company valued at $4,800.
SECURITIES ISSUED AFTER
THE ONE-YEAR COMPLIANCE PERIOD APPLICABLE TO NON-REPORTING ISSUERS AS SET FORTH IN CATEGORY 3 OF RULE 903 OF REGULATION S):
On November 30, 2011,
the Company issued 5,000,000 shares of Series “A” Preferred Stock (100% of the authorized preferred stock) to our
Chief Executive Officer, Peter Smith, for an aggregate consideration of $480,000 as a bonus package equal to 24 months of salary.
On November 20, 2012, the Board of Directors and Mr. Smith subsequently agreed that Mr. Smith would retire to treasury 3,466,668
of these Series “A” preferred shares and retain the balance, 1,533,332 shares. Mr. Smith subsequently gifted 400,000
of these Series “A” preferred shares to Mr. Taddei (CFO of the Company) and a further 133,332 preferred shares to
two other employees of the Company, 66,666 Series “A” preferred shares each.
On December 12, 2013 the
Company issued 450,000 Series “A” preferred shares to the Company’s CFO (200,000), CEO (200,000) and one employee
(50,000) having a fair value of $540,000 ($0.12 per share), based upon the fair value of the services rendered, which represented
the best evidence of fair value.
SECURITIES ISSUED IN 2012
On March 31, 2012, the
Company issued 100,000 shares of common stock to Mr. Robert Hasnain, a resident of the United Kingdom, as interest on a $50,000
loan he made to the Company. $30,000 was loaned to Global Equity Partners Plc. on March 20, 2012 and the $20,000 balance of the
loan was paid to Global Equity Partners Plc. on April 10, 2012. The Company valued these 100,000 shares at $50,000 in the aggregate.
On March 31, 2012, the
Company issued 40,000 shares of common stock to Mr. David Lonergan, a resident of Ireland, as a portion of the interest due under
a loan of $20,000 loan made to Global Equity Partners PLC on March 13, 2012. The Company valued these shares at $20,000 in the
aggregate.
On May 21, 2012 the Company
issued 25,000 common restricted shares to Mr. Stephen Stanton in exchange for $12,500 of services rendered to the Company in the
form of an introduction to a new client.
On May 21, 2012, the Company
issued 30,000 common restricted shares at $.50 each to a stock subscriber, Mr. Christopher Percy.
On May 22, 2012, the Company
issued 200,000 common restricted shares at $.50 each to a stock subscriber, Mrs. Susan Smith.
On June 7, 2012, an investor,
Mr. Julian Ainsby, subscribed for 50,000 common restricted shares at $.50.
On June 21, 2012 the Company
issued 20,000 common restricted shares to Mr. Adrian Scarrott in lieu of $10,000 of salary due.
On July 7, 2012, the Company
issued 40,000 common restricted shares at $.50 to Mr. David Lonergan as repayment of the $20,000 loan he extended to the Company
in February of 2012.
On September 24, 2012,
the Company issued 40,000 common restricted shares at $.25 to Mr. Robert Torab Hasnain as repayment of the $10,000 loan he extended
to the Company in March of 2012.
On November 16, 2012,
the Company issued 2,000 common restricted shares at $.25 to Mr. David Lonergan as repayment of the $500 interest due to him.
On November 21, 2012,
the Company issued 300,000 common restricted shares at $.25 to Tempest Holdings Limited in exchange of $75,000 of services rendered
in the form of introductions of various new clients to the Company.
On February 15, 2013,
the Company issued 100,000 common restricted shares at $.80 to Tricon Holdings Limited in exchange of $80,000 of marketing services
rendered to the Company.
On March 12, 2013, the
Company issued 75,000 common restricted shares at $1.10 to Tempest Holdings Limited in exchange of $82,500 of services rendered
in the form of introductions of various new clients to the Company.
On April 5, 2013, the
Company issued 150,000 common restricted shares at $.95 to Tricon Holdings Limited in exchange of $142,500 of marketing services
rendered to the Company.
On April 5, 2013, the
Company issued 500,000 common restricted shares at $.25 to Caro Capital Inc. in exchange of $125,000 of invest relations services
rendered to the Company.
On April 15, 2013, the
Company issued 25,000 common restricted shares at $.55 to Philip Brooks in exchange of $13,750 of services rendered to the Company.
On April 24, 2013,
the Company issued 150,000 common restricted shares at $.29 to Robert Sullivan in exchange of $43,500 of marketing and radio advertisement
services rendered to the Company.
On May 3, 2013, an investor,
Piquerel Investment Limited, subscribed for 10,000 common restricted shares at $.60.
On May 17, 2013, the Company
issued 40,000 common restricted shares at $.17 to Scott Suckling in exchange of $6,800 of services rendered in the form of introduction
of a new client to the Company.
On May 17, 2013, the Company
issued 99,385 common restricted shares at $.17 to ME Biz Limited in exchange of $16,972 of services rendered in the form of introduction
of a new client to the Company.
In October through December
2013, the Company issued 30,000 common restricted shares to the beneficiary of The Able Foundation (Mr. Robert Luke Hague) as
an interest payment for a loan $120,420 signed on October 9, 2013. The stock issued was valued for a total cost of $3,900 at an
average of $0.13.
From January, 2013 through
December, 2013, the Company issued 120,000 common restricted shares to Tempest Holdings Limited in exchange of a twelve month
consultancy agreement that began on January 1, 2013. The stock issue was valued at $50,400 at an average of $0.42 over the twelve
month life of the contract.
On December 12, 2013 the
Company issued 10,000 common restricted shares at $.12 to Zara V. Clark in exchange of $1,200 of services rendered to the Company.
On December 12, 2013 the
Company issued 100,000 common restricted shares at $.12 to Michael Paul Duff in exchange of $12,000 of marketing services rendered
to the Company in the United Kingdom.
All of the following stock
was issued in reliance on the exemption from registration requirements of the 33 Act provided by Section 4(2) of the 33 Act, as
the issuance of the stock did not involve a public offering of securities based on the following:
|
●
|
The
2,000,000 shares of common stock issued to Javan Khazali.
|
|
|
|
|
●
|
The
1,983,332 shares of Series “A” Preferred Stock issued to Peter Smith, Enzo
Taddei and Patrick V. Dolan.
|
|
|
|
|
●
|
The
140,000 shares of common stock issued to Mr. Hasnain,
|
|
|
|
|
●
|
The
82,000 shares issued to Mr. Lonergan.
|
|
|
|
|
●
|
The
25,000 common shares issued to Mr. Stephen Stanton.
|
|
|
|
|
●
|
The
30,000 common shares issued to Mr. Christopher Percy.
|
|
|
|
|
●
|
The
200,000 shares issued to Mrs. Susan Smith.
|
|
|
|
|
●
|
The
20,000 shares issue to Mrs. Alexander Louise Scarrott.
|
|
|
|
|
●
|
The
50,000 common shares issued to Mr. Julian Ainsby.
|
|
|
|
|
●
|
The
495,000 common shares issued to Tempest Holdings Limited.
|
|
|
|
|
●
|
The
250,000 shares issued to Tricon Holdings Limited.
|
|
|
|
|
●
|
The
500,000 shares issued to Caro Capital Inc.
|
|
|
|
|
●
|
The
25,000 shares issued to Philip Brooks.
|
|
|
|
|
●
|
The
150,000 shares issued to Robert Sullivan.
|
|
|
|
|
●
|
The
16,667 shares issued to Piquerel Investments Limited.
|
|
|
|
|
●
|
The
40,000 shares issued to Scott Suckling.
|
|
|
|
|
●
|
The
99,385 shares issued to ME Biz Limited.
|
|
|
|
|
●
|
The
30,000 shares issued to Robert Luke Hague.
|
|
|
|
|
●
|
The
10,000 shares issue to Zara Victoria Clark.
|
|
|
|
|
●
|
The
100,000 shares issued to Michael Paul Duff.
|
|
●
|
each
investor represented to us that he was acquiring the securities for his own account for investment and not for the account
of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within
the meaning of the 33 Act;
|
|
●
|
we
provided each investor with written disclosure prior to sale or transfer that the securities have not been registered under
the 33 Act and, therefore, cannot be resold unless they are registered under the 33 Act or unless an exemption from registration
is available;
|
|
●
|
each
investor agreed not to sell or otherwise transfer the purchased securities unless they are registered under the 33 Act and
any applicable state laws, or an exemption or exemptions from such registration are available;
|
|
●
|
each
investor had knowledge and experience in financial and other business matters such that he was capable of evaluating the merits
and risks of an investment in us;
|
|
●
|
such
investor was given information and access to all of our documents, records, books, officers and directors, our executive offices
pertaining to the investment and was provided the opportunity to ask questions and receive answers regarding the terms and
conditions of the offering and to obtain any additional information that we possess or were able to acquire without unreasonable
effort and expense;
|
|
●
|
each
investor had no need for liquidity in their investment in us and could afford the complete loss of their investment in us;
|
|
●
|
we
did not employ any advertisement, article, notice or other communication published in any newspaper, magazine or similar media
or broadcast over television or radio;
|
|
●
|
we
did not conduct, hold or participate in any seminar or meeting whose attendees had been invited by any general solicitation
or general advertising;
|
|
●
|
we
placed a legend on each certificate or other document that evidences the securities stating that the securities have not been
registered under the 33 Act and setting forth or referring to the restrictions on transferability and sale of the securities;
|
|
●
|
no
broker-dealer or underwriter was involved in the sale of the shares; and
|
|
●
|
we
added the following legend to the certificates:
|
“The shares represented
by this certificate have been issued to the registered owner in reliance upon written representations that these shares have been
taken for investment. These shares have not been registered under the Securities Act of 1933, as amended (“Act”),
and may not be sold, transferred or assigned unless an opinion of counsel satisfactory to the company has been received by the
company to the effect that such sale, transfer or assignment will not be in violation of the Act and the rules and regulations
promulgated thereunder or applicable state securities laws.”
All of the other shares
described above (except for the 2,000,000 shares of common stock issued to Mr. Javan Khazali) were issued in reliance on the exemption
from registration requirements of the 33 Act provided by Regulation S of the 33 Act, as the issuance of the shares did not involve
the sale to any person who was a “U.S. Person” (as defined in Rule 902 of Regulation S) and based on the following:
|
●
|
we
did not employ a “distributor” (as defined in Rule 902 of Regulation S);
|
|
●
|
each
investor represented and proved to us that he was not a “U.S. person” (as defined in Rule 902 of Regulation S);
|
|
●
|
all
of the offers and sales were made within the one-year compliance period of Category 3 of Rule 903 of Regulation S, applicable
to non-reporting issuers;
|
|
●
|
each
investor represented to us that he was acquiring the securities for his own account for investment and not for the account
of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within
the meaning of the 33 Act;
|
|
●
|
we
provided each investor with written disclosure prior to sale or transfer that the securities have not been registered under
the 33 Act and, therefore, cannot be resold unless they are registered under the 33 Act or unless an exemption from registration
is available;
|
|
●
|
each
investor agreed not to sell or otherwise transfer the purchased securities unless they are registered under the 33 Act and
any applicable state laws, or an exemption or exemptions from such registration are available;
|
|
●
|
each
investor had knowledge and experience in financial and other business matters such that he was capable of evaluating the merits
and risks of an investment in us;
|
|
●
|
such
investor was given information and access to all of our documents, records, books, officers and directors, our executive offices
pertaining to the investment and was provided the opportunity to ask questions and receive answers regarding the terms and
conditions of the offering and to obtain any additional information that we possess or were able to acquire without unreasonable
effort and expense;
|
|
●
|
each
investor had no need for liquidity in their investment in us and could afford the complete loss of their investment in us;
|
|
●
|
we
did not employ any advertisement, article, notice or other communication published in any newspaper, magazine or similar media
or broadcast over television or radio;
|
|
●
|
we
did not conduct, hold or participate in any seminar or meeting whose attendees had been invited by any general solicitation
or general advertising;
|
|
●
|
we
placed a legend on each certificate or other document that evidences the securities stating that the securities have not been
registered under the 33 Act and setting forth or referring to the restrictions on transferability and sale of the securities;
|
|
●
|
we
placed stop transfer instructions in our stock transfer records;
|
|
●
|
no
underwriter was involved in the offering;
|
|
●
|
we
made independent determinations that such person was a sophisticated or accredited investor and that he was capable of analyzing
the merits and risks of their investment in us, that he understood the speculative nature of their investment in us and that
he could lose their entire investment in us; and
|
|
●
|
we
added the following legend to the certificates:
|
“The shares represented
by this certificate have not been issued to the registered owner in reliance upon written representations that these shares have
not been registered under the Securities Act of 1933 (“Act”) and are “restricted securities,” as defined
under Regulation S, and cannot be sold, transferred, assigned or traded in the United States for a period of 12 months from the
date of issue and require written release from either the issuing company or their attorney prior to legend removal.”
ISSUER REPURCHASES OF EQUITY SECURITIES
None.
ITEM 6.
|
|
SELECTED
FINANCIAL DATA.
|
Not applicable.
ITEM 7.
|
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
|
For the years ended December 31, 2013
and 2012:
The Company had revenues
amounting to $174,349 and $609,000, respectively, for the years ended December 31, 2013 and 2012.
|
|
|
December
31, 2013
|
|
|
December
31, 2012
|
|
|
Changes
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
174,349
|
|
|
$
|
609,000
|
|
|
$
|
434,651
|
|
|
|
|
$
|
174,349
|
|
|
$
|
609,000
|
|
|
$
|
434,651
|
|
The total expenditures
amounted to $2,519,307
and $3,464,556, respectively, for the years ended December 31, 2013 and 2012. The following table
sets forth the Company’s expenditure analysis for both years:
|
|
December 31, 2013
|
|
|
December
31, 2012
|
|
|
Changes
|
|
General and Administrative:
|
|
|
|
|
|
|
|
|
|
|
|
|
General office expenses
|
|
|
58,387
|
|
|
|
34,763
|
|
|
|
23,624
|
|
Advertising and promotion
|
|
$
|
179,434
|
|
|
$
|
14,398
|
|
|
$
|
165,036
|
|
Rent
|
|
|
21,112
|
|
|
|
10,743
|
|
|
|
10,369
|
|
Travel
|
|
|
23,608
|
|
|
|
34,190
|
|
|
|
(10,582
|
)
|
Client entertainment
|
|
|
14,195
|
|
|
|
12,516
|
|
|
|
1,679
|
|
Bank service charges
|
|
|
4,262
|
|
|
|
3,449
|
|
|
|
813
|
|
Dubai business licenses & Local Dubai Sponsors
|
|
|
78,967
|
|
|
|
86,500
|
|
|
|
(7,533
|
)
|
Commision expense
|
|
|
87,974
|
|
|
|
162,500
|
|
|
|
(74,526
|
)
|
Bad debt allowances
|
|
|
-
|
|
|
|
35,000
|
|
|
|
(35,000
|
)
|
Total General and Administrative
|
|
$
|
467,939
|
|
|
$
|
394,059
|
|
|
$
|
73,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Compensation
|
|
|
540,000
|
|
|
|
1,333,330
|
|
|
|
(793,330
|
)
|
Total Stock Compensation
|
|
$
|
540,000
|
|
|
$
|
1,333,330
|
|
|
$
|
(793,330
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers and Directors
|
|
|
420,000
|
|
|
$
|
360,000
|
|
|
$
|
60,000
|
|
Employees
|
|
|
130,283
|
|
|
|
139,999
|
|
|
|
(9,716
|
)
|
Total Salaries
|
|
$
|
550,283
|
|
|
$
|
499,999
|
|
|
$
|
50,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accountants
|
|
$
|
20,500
|
|
|
$
|
43,633
|
|
|
$
|
(23,133
|
)
|
Edgar Services
|
|
|
560
|
|
|
|
4,905
|
|
|
|
(4,345
|
)
|
Legal
|
|
|
19,007
|
|
|
|
18,523
|
|
|
|
484
|
|
Legal (Clients)
|
|
|
41,497
|
|
|
|
34,030
|
|
|
|
7,467
|
|
Tax Consultants
|
|
|
2,055
|
|
|
|
12,000
|
|
|
|
(9,945
|
)
|
Tranfers Agents
|
|
|
3,925
|
|
|
|
2,780
|
|
|
|
1,145
|
|
Investor Relations
|
|
|
130,000
|
|
|
|
10,000
|
|
|
|
120,000
|
|
XBRL Services
|
|
|
3,942
|
|
|
|
3,458
|
|
|
|
484
|
|
Other professional services
|
|
|
424,693
|
|
|
|
54,406
|
|
|
|
370,287
|
|
Total Professional Services
|
|
$
|
646,179
|
|
|
$
|
183,735
|
|
|
$
|
462,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,382
|
|
|
|
117
|
|
|
|
1,265
|
|
Total Depreciation
|
|
$
|
1,382
|
|
|
$
|
117
|
|
|
$
|
1,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of financial assets
|
|
|
160,000
|
|
|
|
975,000
|
|
|
|
(815,000
|
)
|
Total Impairment of financial assets
|
|
$
|
160,000
|
|
|
$
|
975,000
|
|
|
$
|
(815,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
$
|
2,365,784
|
|
|
$
|
3,386,240
|
|
|
$
|
(1,020,456
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income / expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income / expense
|
|
|
148,210
|
|
|
|
7,847
|
|
|
|
140,363
|
|
Foreign currency transaction loss
|
|
|
-
|
|
|
|
469
|
|
|
|
|
|
Amortization of debt discount
|
|
|
23,513
|
|
|
|
70,000
|
|
|
|
(46,487
|
)
|
Gain on settlement of liabilities
|
|
|
(18,200
|
)
|
|
|
-
|
|
|
|
(18,200
|
)
|
Total Other Income / Expense
|
|
$
|
153,523
|
|
|
$
|
78,316
|
|
|
$
|
75,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenditure
|
|
$
|
2,519,307
|
|
|
$
|
3,464,556
|
|
|
$
|
(944,780
|
)
|
The net loss from operations
for the years ended December 31, 2013 and 2012 was $2,191,435 and $2,777,240, respectively.
The net loss for the years
ended December 31, 2013 and 2012 amounted to $2,344,958 and $2,855,556, respectively.
The Company´s Comprehensive
Loss for the years ended December 31, 2013 and 2012 amounted to $2,344,958 and $2,855,556, respectively.
|
|
2013
|
|
|
2012
|
|
Net loss
|
|
$
|
(2,344,958
|
)
|
|
$
|
(2,855,556
|
)
|
Comprehensive Loss
|
|
$
|
(2,344,958
|
)
|
|
$
|
(2,855,556
|
)
|
At December 31, 2013 and
December 31, 2012, the Company had 31,044,202 and 29,627,700 shares issued and outstanding, respectively, the weighted average
was 30,474,948 and 29,149,498 shares, respectively, hence, the loss per share at December 31, 2013 and 2012 was $(0.08) and (0.10).
CAUTIONARY FORWARD - LOOKING STATEMENT
The following discussion
should be read in conjunction with our financial statements and related notes.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB
issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS
(International Financial Reporting Standard).” ASU 2011-04 attempts to improve the comparability of fair value measurements
disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. Amendments in ASU 2011-04 clarify the intent
of the application of existing fair value measurement and disclosure requirements, as well as change certain measurement requirements
and disclosures. ASU 2011-04 is effective for the Company beginning January 1, 2012 and will be applied on a prospective basis.
We do not believe that the adoption of ASU 2011-04 will have material effect on our consolidated financial statements.
BUSINESS DEVELOPMENT
RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER
31, 2013
At the beginning of 2013,
we already had contracts with five companies: (1) Arrow Cars International Inc., a company based in Spain and the US; and (2)
Voz Mobile Cloud Ltd., a U.S. corporation, (3) Direct CCTV / Direct Security Integration Inc., a UK and US based company, (4)
BTI / scorpion Performance Inc. based in the US, (5) Direct CCTV / Direct Security Integration Inc., a UK and US based company.
During 2013 we gained
the following clients:
|
(1)
|
SCANDINAVIAN
AGRITEX CO. LIMITED
|
Scandinavian Agritex Co.
Limited is a United Kingdom based company that is a green “Agriculture Technology and Textile” company whose business
is situated in Sri-Lanka, Norway and the United Kingdom whose main purpose to develop and rapidly expand the organic cotton industry
in the country. Scandinavian Agritex Co. Limited was founded by textile professionals, fashion brand owners, and finance people
with significant international management experience. SAC has an extensive management team comprised of highly skilled and competent
agronomists, farmers and textile professionals. The Company´s long term objective is to operate the entire textile value
chain, including cultivation of cotton, ginning, spinning, weaving, garment manufacture, fashion and retail, with the objective
of retaining control and generating significant margins on each step of the chain. Furthermore, the Company intends to produce
organic cotton fabrics to be used in the sustainable clothing lines of well-known fashion brands and retailers.
We have contracted to
provide Scorpion the following services:
|
●
|
Act
as a corporate finance advisor to Scandinavian Agritex Co. Limited;
|
|
●
|
Advise
the client on the structure of the acquisition and assist the client in the preparation and authorization of documentation;
|
|
●
|
Use
reasonable efforts through our marketing and public relations contacts to support and market Scorpion, including: (i) where
appropriate, arrange meetings and assist in presentations; (ii) assist the client, its management and advisors in negotiating
definitive documentation; and (iii) otherwise assist the client with such other actions as may be necessary to accomplish
organic and inorganic growth; and
|
|
●
|
Introduce
the client to professional advisors, such as accountants, auditors, lawyers and stock registrars who would assist the client
with having its shares listed on the Dubai NASDAQ.
|
Scandinavian Agritex Co.
Limited agreed to pay us $400,000 and to date we have been paid $210,000. In addition, we have agreed that we will receive a 6%
equity stake in Scorpion upon its initial public offering on the Dubai NASDAQ.
During 2013, the Company
had revenues totaling $174,349 of which $3,000 was comprised entirely of cash received from our current clients.
In 2013, our total operating
expenses amounted to $2,365,784.
|
|
December
31, 2013
|
|
General and Administrative:
|
|
|
|
|
General office expenses
|
|
|
58,387
|
|
Advertising and promotion
|
|
$
|
179,434
|
|
Rent
|
|
|
21,112
|
|
Travel
|
|
|
23,608
|
|
Client entertainment
|
|
|
14,195
|
|
Bank service charges
|
|
|
4,262
|
|
Dubai business licenses & Local Dubai Sponsors
|
|
|
78,967
|
|
Commission expense
|
|
|
87,974
|
|
Bad debt allowances
|
|
|
-
|
|
Total General and Administrative
|
|
$
|
467,939
|
|
|
|
|
|
|
Stock Compensation
|
|
|
540,000
|
|
Total Stock Compensation
|
|
$
|
540,000
|
|
|
|
|
|
|
Salaries:
|
|
|
|
|
Officers and Directors
|
|
|
420,000
|
|
Employees
|
|
|
130,283
|
|
Total Salaries
|
|
$
|
550,283
|
|
|
|
|
|
|
Professional Services:
|
|
|
|
|
Accountants
|
|
|
20,500
|
|
Edgar Services
|
|
|
560
|
|
Legal
|
|
|
19,007
|
|
Legal (Clients)
|
|
|
41,497
|
|
Tax Consultants
|
|
|
2,055
|
|
Tranfers Agents
|
|
|
3,925
|
|
Investor Relations
|
|
|
130,000
|
|
XBRL Services
|
|
|
3,942
|
|
Other professional services
|
|
|
424,693
|
|
Total Professional Services
|
|
$
|
646,179
|
|
Depreciation
|
|
|
1,382
|
|
Total Depreciation
|
|
$
|
1,382
|
|
|
|
|
|
|
Impairment of financial assets
|
|
|
160,000
|
|
Total Impairment of financial assets
|
|
$
|
160,000
|
|
|
|
|
|
|
Total Operating Expenses
|
|
$
|
2,365,784
|
|
In 2013, the Company incurred,
within the operating expenses, other “non-recurring expenses” amounting to $700,000:
Non-recurring Expenses:
|
|
December
31, 2013
|
|
Stock Compensation
|
|
|
540,000
|
(1)
|
Impairment of financial assets
|
|
$
|
160,000
|
(2)
|
|
|
$
|
700,000
|
|
_____________
|
(1)
|
The
stock compensation valued at $540,000. This was the result of the Company issuing the
CEO, CFO and New Business Managing Director 450,000 Series “A” preferred
shares.
|
|
(2)
|
Realized
loss due to the permanent impairment of our Voz Mobile Cloud Limited private stock; this
impairment was for $160,000.
|
_____________
Based on 30,474,948 weighted average shares
outstanding for the year ended December 31, 2013, the loss per share was $(0.08).
LIQUIDITY AND CAPITAL RESERVES
Our
audited financial statements contained herein have been prepared assuming that the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company had a loss of $2,344,958 for the year ended December 31, 2013, $160,000
of which is due to the permanent impairment of financial assets and a further $540,000 was due to stock compensation to the company´s
CEO, CFO and New Business Managing Director; and the Company had $48,856 in cash; net cash used in operations of $(929,502) for
the year ended December 31, 2013; and a working capital deficit of $(1,109,309) and stockholders´ deficit of $2,440,966
as of December 31, 2013. 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.
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 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. These consolidated 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.
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:
|
●
|
The
cash fees that we expect to receive during the next 12 months from the clients we currently
have under contract.
|
|
●
|
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.
|
|
●
|
Receiving
loans from third part lenders and/ or investors.
|
|
1)
|
On
December 9, 2013, the Company signed a 10 year loan facility agreement with and Irish
company called PPF Capital Source Lending Company 2 Limited domiciled in Dublin (Ireland),
for $3,540,000 at 4.5% interest per annum. The interest will be paid on a basis monthly
but only on the amounts drawn down on the loan. The company had to guarantee the loan
by way of a cash payment of $450,000 which it did by on December 12, 2013 (this amount
is reflected on our balance sheet under “other current assets”). The loan
agreement was and still is contingent on PPF´s securing a minimum cash collateral
of $10,000,000 collectively or individually from all borrowers / subscribers. To date,
PPF has not reached this critical mass of $10,000,000 but we understand that PPF is not
far off this amount hence drawdown can be estimated on or before April 30, 2014.
|
|
●
|
The
cash fees that we expect to receive during the next 12 months from the clients we have
under contract prior to December 31, 2013 such as:
|
|
1)
|
MEDINAS
HOLDING LIMITED, a Company based in Holland that represents companies that have patented
medical procedures and a fully integrated system that have allowed them to become the
market leaders in the field of treating cancer. The treatment methods are FDA approved
and CE registered. The Company is currently distributing their solution throughout the
USA, Europe and the Middle East. This patented medical procedure is specifically designed
and manufactured for use in abdominal surgery for peritoneal cancer. It is a treatment
that is delivered directly into the abdomen. This leap forward in medical innovation
in the fight against cancer has been welcomed by the global medical community.
|
This company engaged
our services on February 4, 2014 and has paid us a retainer fee of $25,000 to source the company a Dubai sponsor for a subsequent
listing of its stock on the Dubai NASDAQ. Once the sponsor has been sourced, we will engage in a subsequent contract valued at
a further $440,000.
|
2)
|
YOUR
MD AS is a British and Norwegian company with offices in London, Oslo, Shanghai and
Dubai and in Q2 2014, will launch a series of mobile applications in the Middle East,
that are set to revolutionise “mHealth” by delivering personalized healthcare
advice to millions via mobile and tablet devices. This service brings healthcare advice
to those in areas where primary healthcare is needed most; whether that’s due to
large expense, poor access, and poor quality primary health or for those who are unable
to travel. Current industry figures show that good quality mHealth services can reduce
the strain on healthcare systems across the world by up to 90% - especially in geographies
that have better access to mobile networks than to basic sanitation. Your.MD is primarily
focused on emerging markets.
|
This company engaged
our services on February 10, 2014 and has paid us a retain fee of $25,000 to source the company a Dubai sponsor for a subsequent
listing of its stock on the Dubai NASDAQ. One the sponsor has been sourced, we will engage in a subsequent contract valued at
a further $440,000.
|
3)
|
IRON
ORE OF AFRICA LIMITED is United Kingdom company that has a series of iron ore mining
contracts in Africa.
|
This company engaged
our services on February 26, 2014 and has paid us a retain fee of $25,000 to source the company a Dubai sponsor for a subsequent
listing of its stock on the Dubai NASDAQ. One the sponsor has been sources, we will engage in a subsequent contract valued at
a further $440,000.
The contracted fees with
the clients listed in the table below and the fees we have received from the clients to date are set forth in the following table.
|
|
|
Contract value
|
|
|
Paid
|
|
|
Future Revenue
|
|
|
Client
|
|
cash
|
|
|
to date
|
|
|
outstanding
to date
|
|
1
|
Arrow Cars International Inc
|
|
$
|
135,000
|
|
|
$
|
135,000
|
|
|
$
|
-
|
|
2
|
Direct Security Integration Inc
|
|
$
|
240,000
|
|
|
$
|
240,000
|
|
|
$
|
-
|
|
3
|
Regis Card Limited
|
|
$
|
250,000
|
|
|
$
|
150,000
|
|
|
$
|
100,000
|
|
4
|
BTI / Scorpion Performance Inc.
|
|
$
|
350,000
|
|
|
$
|
180,000
|
|
|
$
|
170,000
|
|
5
|
Scandivania AgriTex Co. Limited
|
|
$
|
400,000
|
|
|
$
|
210,000
|
|
|
$
|
190,000
|
|
6
|
Medinas Holding Limited
|
|
$
|
465,000
|
|
|
$
|
25,000
|
|
|
$
|
440,000
|
|
7
|
Your MD AS
|
|
$
|
465,000
|
|
|
$
|
25,000
|
|
|
$
|
440,000
|
|
8
|
Iron Ore of Africa Ltd.
|
|
$
|
465,000
|
|
|
$
|
25,000
|
|
|
$
|
440,000
|
|
|
|
|
$
|
2,770,000
|
|
|
$
|
990,000
|
|
|
$
|
1,780,000
|
|
No further commissions
or fees will be paid to any person or entity related to these nine clients.
FUTURE PLANS
We currently have eight clients under contract:
|
1)
|
Arrow
Cars International Inc
|
|
2)
|
Direct
Security Integration Inc
|
|
4)
|
BTI
/ Scorpion Performance Inc.
|
|
5)
|
Scandivania
AgriTex Co. Limited
|
|
6)
|
Medinas
Holding Limited
|
|
8)
|
Iron
Ore of Africa Ltd.
|
MILESTONES FOR 2014 /2015:
Our specific plan of operations
and milestones through March 2015 are as follows:
|
1)
|
DEVELOP
THE INTRODUCER NETWORK FURTHER AND IN HOPES 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)
|
Certain
registered investment houses in London (United Kingdom).
|
|
(2)
|
An
Austrian management consultancy firm based in Vienna (Austria).
|
|
(3)
|
Certain
investment banks based in Dubai (UAE)
|
|
(4)
|
Certain
Private Private Banks based in Amsterdam (Holland) and Zurich in Switzerland.
|
|
(5)
|
The
Colombo Stock Exchange in Sri Lanka.
|
|
(6)
|
Certain
family offices in Dubai (UAE).
|
We do not have any verbal
or written agreements with the firms identified above, as our relationship with each of them has been developed over the past
year or so.
We intend to develop
relationships with a further three “introducers” to potential new business for the Company before the end of June
2014.
We will continue to establish
a firm presence in Dubai, UAE where we are attracting clients, relationships and awareness. Our Dubai operation is currently a
branch office of the company allowing us a license to trade in the area. This branch office will continue to recruit new members
of staff that will allow us to grow and become more efficient in Dubai.
|
3)
|
CREATE
A MORE EFFICIENT SYSTEM FOR REVIEWING PROSPECTIVE BUSINESSES.
|
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.
We will create a deeper
due diligence program allowing us to dig deep on any prospective client prior to engagement thus protecting the company from any
future problems by employing one new staff member that will be responsible for the due diligence analysis and creating a report
for our file on their findings.
|
4)
|
EXPAND
OUR CONSULTANCY TO INCLUDE MORE MERGER AND ACQUISITION ACTIVITY.
|
We intend to form relationships
with merger and acquisition specialists during 2014 which will hopefully enable us to:
|
(4)
|
Find
potential merger and acquisition candidates.
|
|
(5)
|
Introduce
our clients to brokers and investment bankers.
|
|
(6)
|
Introduce
our clients to the appropriate professionals (attorneys and accountants) to assist them
in a public offering or exchange listing.
|
The only additional cost
for this activity will be a very small administrative burden for telephone calls and communications to be funded out of operational
income, mainly income receivable from clients currently under contract.
|
5)
|
DEVELOP
IN HOUSE IT DEPARTMENT
|
Commencing initially with
one member we will start to develop a proprietary program allowing us to easily monitor a client’s development status and
work in progress. We will also use this tool to manage our pipeline of clients and therefore it will become vital in our cash
flow forecasting.
In 2014, we intend to
become one of the first foreign companies to dual list on Dubai NASDAQ; our plan is to carry out a public relations campaign alongside
the dual listing process with the public relations firm we have selected with a view to prepare a campaign that will have a maximum
effect.
|
7)
|
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. 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.
At present we are being
received with open arms by the Dubai and Middle Eastern financial community; hence we have plans to host various hospitality events
for our current clients, our key contacts and upper management of the company.
|
8)
|
EXPAND
OUR RANGE OF BUSINESS AND CONTACTS
|
We intend to take our
consultancy service outside of the Middle East and Europe into Asia and Sri Lanka. We will expand on a ‘Commission Only’ basis
for the individuals or companies who take on our service to offer to their clients. Accountants, lawyers and finance professionals
are the target market for overlaying our service into their existing client banks in return for a percentage of fees received.
We also intend to add at least one new member to our administration team within the second quarter of 2014.
We will continue the “Road
shows”, in Dubai with the support of the Dubai NASDAQ for companies already listed in Sri Lanka and other parts of Asia
who could be seeking a dual listing in Dubai to provide liquidity and more capital raising options. We have commenced initial
conversations with a brokerage house in Sri Lanka to look at their clients they have that would be suitable for the Dubai market.
We will initially invite management of selected companies to Dubai for a two day event in conjunction with Nasdaq Dubai and a
number of leading Investment Institutions, the anticipated cost of this is to be met by the prospective clients themselves and
sponsorship from the institutions and Nasdaq Dubai.
|
10)
|
FURTHER
EXPAND OUR RANGE OF BUSINESS AND CONTACTS
|
The foundation for this
development has been created in 2013. In 2014, we intend to cement in the relationships created. The target markets for attracting
clients are: Thailand, Sri Lanka, China, Hong Kong and Singapore
To service the clients
generated from these markets we will spend time creating a network of service companies who we can utilize to assist us on a local
basis. We will explore the possibilities of dual listings for our clients in Singapore to allow us a local market for any Asian
clients we will attract and giving the company a firm foothold in the Asian territory.
|
11)
|
EMPLOYEES;
IDENTIFICATION OF A SIGNIFICANT EMPLOYEE
|
We currently have four
employees: Peter J. Smith, and Enzo Taddei. Peter J. Smith, our President, and Enzo Taddei, our Chief Financial Officer and Patrick
V. Dolan, new business managing director, and Zara V. Clark, our Dubai office manager, each have an employment agreement with
the Company. All are full time employees of the Company. We intend to hire additional employees in 2014, such as an in-house analyst
in Dubai and a person to assist our new business managing director in London.
ITEM 7A.
|
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
|
Not applicable.
ITEM 8.
|
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
|
Our financial statements
and supplementary data may be found beginning at page F-1.
ITEM 9.
|
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
Dismissal of Berman & Company CPA
The Company elected to
terminate its engagement of Berman & Company, P.A. (“Berman”) as the independent registered public accounting
firm responsible for auditing the Company’s financial statements, effective as of January 18, 2013, which termination was
approved by the Company’s Board of Directors.
Berman´s report
on the Company’s financial statements for the past two years did not contain an adverse opinion or a disclaimer of opinion,
and was not qualified or modified as to uncertainty, audit scope, or accounting principles with the exception that Berman’s
Audit Reports for the years ended December 31, 2011 and December 31, 2010, contained an explanatory note which raised substantial
doubt as to the ability of the Company to continue as a going concern. During the Company’s two most recent fiscal years
and any subsequent interim period for which a review report was provided preceding the termination of Berman, the Company did
not have any disagreements with Berman on any matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Berman, would have caused it to make
reference to the subject matter of the disagreements in connection with its report.
Engagement of De Joya Griffith LLC
On January 18, 2013, the
Company engaged De Joya Griffith LLC (“DJG”) to serve as the independent registered public accounting firm responsible
for auditing the Company’s financial statements. The engagement with De Joya Griffith, effective as of January 18, 2013,
was approved by the Board of Directors.
Neither the Company nor
anyone on behalf of the Company consulted DJG during the two most recent fiscal years and any subsequent interim period prior
to engaging DJG, regarding either:
|
(i)
|
the
application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion
that might be rendered on the Company’s financial statements, and either a written report was provided to the Company
or oral advice was provided that DJG concluded was an important factor considered by the Company in reaching a decision as
to the accounting, auditing or financial reporting issue; or
|
|
(ii)
|
any
matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) and the related instructions of Item
304 of Regulation S-K) or reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).
|
There are not and have
not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial
statement disclosure.
ITEM 9A.
|
|
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 ineffective.
MANAGEMENT’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the 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.
Management assessed the
effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, management
used the framework set forth in the report entitled Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal
control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication,
and (v) monitoring. This annual report does not include an attestation report of our registered public accounting firm regarding
internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting
firm pursuant to temporary rules of the Securities and Exchange Commission that permits us to provide only management’s
report in this annual report.
IDENTIFIED
MATERIAL WEAKNESSES AND SIGNIFICANT DEFICIENCIES
A
material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood
that a material misstatement of the financial statements will not be prevented or detected. Management identified the following
internal control deficiency which we had assessed as a material weakness as of December 31, 2013, during our assessment of our
internal control over financial reporting as follows:
|
1.
|
We
did not have adequate segregation of duties over certain areas of our financial reporting process.
|
The
internal control deficiency identified above will only be completely corrected if the company expands and has the capacity to
adequately segregate the duties to mitigate risk in financial reporting. Expansion will depend mostly on the ability of management
to generate enough income to warrant growth in personnel.
We
did not have effective comprehensive entity-level internal controls specific to the structure of our board of directors and organization
of critical committees. Due to our expected expansion, without correcting this significant deficiency and ensuring that our board
of directors has the proper oversight and committees are properly established, the control environment in subsequent years may
not be effective.
MANAGEMENT’S
REMEDIATION INITIATIVES
We
are in the further process of evaluating our material and significant deficiencies. We have already begun to remediate many of
the deficiencies. However, others will require additional people, including adding to our board of directors, which will take
longer to remediate.
In
an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated,
or plan to initiate, the following series of measures:
|
1.
|
Identify
and retain one or two new directors for our board of directors including a member who is appropriately credentialed as a financial
expert with a goal of having sufficient independent board of directors oversight;
|
|
|
|
|
2.
|
Ensure
all entity level controls are applied at all levels of the organization and are scalable for acquisition or merge targets;
|
|
|
|
|
3.
|
Establish
comprehensive formal general accounting policies and procedures and require directors or employees to sign off such policies
and procedures as documentation of their understanding of and compliance with company policies;
|
|
|
|
|
4.
|
Make
all directors or employees subject to our Code of Ethics (including those employees in acquisition targets) and require all
employees and directors to sign our Code of Ethics on an annual basis and retain the related documentation; and,
|
|
|
|
|
5.
|
Implement
better segregation of duties given the size of our company.
|
We
plan to test our updated controls and remediate our deficiencies by June 30, 2013.
CONCLUSION
Our
management concluded that our internal control over financial reporting was ineffective. However, the above identified material
weaknesses and deficiency did in fact result in certain material audit adjustments to our 2013 financial statements. However,
it is reasonably possible that, if not remediated, one or more of the identified material weaknesses noted above could result
in a material misstatement in our reported financial statements that might result in a material misstatement in a future annual
or interim period.
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.
ITEM
9B.
|
|
OTHER
INFORMATION.
|
Not
applicable.
PART
III
ITEM
10.
|
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
OFFICERS
AND DIRECTORS
Our
two directors will serve until their two successors are elected and qualified. Our officers are elected by the board of directors
to a term of one year and serve until their successor is duly elected and qualified, or until they are removed from office. Our
board of directors has no nominating, auditing or compensation committees.
The
names, addresses, ages and positions of our officers, directors and key employees are set forth below:
|
|
|
|
First
Year
|
|
|
Name
|
|
Age
|
|
as
Director
|
|
Position
|
|
|
|
|
|
|
|
Peter
James Smith
|
|
45
|
|
2010
|
|
President,
Chief Executive Officer and Director
|
|
|
|
|
|
|
|
Enzo
Taddei
|
|
41
|
|
2011
|
|
Chief
Financial Officer, Secretary and Director
|
The
persons named above were elected to hold their offices until the next annual meeting of our stockholders.
PETER
JAMES SMITH - PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
Mr.
Smith has served as the President, Chief Executive Officer and Director of Global Equity Partners, PLC, our now wholly-owned subsidiary,
since its formation on September 2, 2009. Mr. Smith has also served as the President, Chief Executive Officer and Director of
the Company since December 31, 2010. Between June 1, 2006, and September 2, 2009, when he formed Global Equity Partners, PLC,
Mr. Smith was not employed and spent his time researching the market for the consulting business in which Global Equity Partners,
PLC would be engaged. In 1993, he created an international financial services company in the Middle East and Asia, named Belgravia
Financial Management, and served as the Chief Executive Officer of that firm until he resigned in May 2006. Between 1993 and May
2005, he built Belgravia Financial Management to 23 global offices, 5 country licenses, a Company with $2.2 billion under financial
management. Belgravia Financial Management merged with Intervest SL and became Belgravia Intervest Group Limited. Belgravia Intervest
Group Limited subsequently merged with Tally Ho Ventures, Inc. (TLYH.OB) on May 12, 2005. In 2006, Mr. Smith resigned from his
position as Chief Executive Officer of Tally Ho Ventures, Inc. Tally Ho Ventures, Inc. subsequently changed its name to Premier
Wealth Management, Inc. on September 26, 2007. Mr. Smith first qualified as a stockbroker in London in 1986 with Rensburg and
Co. where he became both a registered equity trader and registered representative of the firm that is a UK registered, full service
stockbroker trading equities, options, warrants, gilts and bonds. He also spent 12 months within that firm covering the back office
facilities of a brokerage house including sales, purchase, rights, dividends and new issues. He then moved on to the London Traded
Options Market where he passed his LTOM open outcry examinations to become an options trader for a subsidiary of ABN Amro bank
called International Clearing Services (ICS). As an Options trader, his job was to trade options on behalf of all the firm’s
clients and to hedge the positions of the market makers the firm cleared for in the equity market. As the sole dual qualified
broker for ICS, he was constantly trading in either equities or options, either by open outcry or screen dealing on the London
Stock Exchange Floor on Threadneedle Street.
ENZO
TADDEI - CHIEF FINANCIAL OFFICER, SECRETARY AND DIRECTOR
Mr.
Taddei was appointed as our Chief Financial Officer and a member of our Board of Directors on September 1, 2011. From November
2010 until December 8, 2011, when he resigned from such offices, Mr. Taddei was a member of the Board of Directors and part-time
Chief Financial Officer of Networking Partners, Inc., a social networking company. Mr. Taddei resigned from such offices in order
to devote more time and effort to our Company. On November 12, 2012 Mr. Taddei was reappointed as interim CEO and sole board member
of Networking Partners Inc. until such a time that a suitable replacement is found. From May 2009 until the present date, Mr.
Taddei has served as Chief Executive Officer and Chief Financial Officer of E3B Consulting Network SL (a firm engaged in accounting
and property management). Mr. Taddei spends only a few of hours a month on E3B Consulting business. From March 2007 until May
2009, Mr. Taddei served as Chief Financial Officer of Dolphin Digital Media (a company engaged in social networking). From August
2006 until March 2007, Mr. Taddei served as Chief Financial Officer of Plays on the Net Plc. (an E-Commerce firm). From July 1999
until August 2006, Mr. Taddei served as Chief Executive Officer and Chief Financial Officer of Adesso Res Asesores (an accounting
firm). In addition to being an accountant and tax consultant by profession, Mr. Taddei is proficient in three languages: English,
Spanish and Italian. He obtained a Degree in Economics from the University of Malaga (Spain) in 1998 and also a Bachelor in Business
Administration (BBA) from the University of Wales in 1996. He also holds a Master Degree in Spanish and International Taxation
granted to him by EADE University in Malaga (Spain) in 2000.
INVOLVEMENT
IN CERTAIN LEGAL PROCEEDINGS
Except
as described below, during the past ten years, no present director, executive officer or person nominated to become a director
or an executive officer of the Company:
|
(1)
|
had
a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent
or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a
general partner at or within two years before the time of such filing, or any corporation or business association of which
he was an executive officer at or within two years before the time of such filing;
|
|
|
|
|
(2)
|
was
convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor
offenses);
|
|
|
|
|
(3)
|
was
subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from or otherwise limiting his involvement in any of the following activities:
|
|
|
|
|
|
(i)
|
acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any
of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director
or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
|
|
|
|
|
|
|
(ii)
|
engaging
in any type of business practice; or
|
|
|
|
|
|
|
(iii)
|
engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of
federal or state securities laws or federal commodities laws; or
|
|
|
|
|
|
(4)
|
was
the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of an federal or state authority
barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described
in paragraph (3) (i), above, or to be associated with persons engaged in any such activity;
|
|
|
|
|
(5)
|
was
found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission to have violated a federal
or state securities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not
been subsequently reversed, suspended or vacated;
|
|
|
|
|
(6)
|
was
found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or vacated;
|
|
(7)
|
was
the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to any alleged violation of:
|
|
|
|
|
|
i.
|
Any
Federal or State securities or commodities law or regulation; or
|
|
|
|
|
|
|
ii.
|
Any
law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order; or
|
|
|
|
|
|
|
iii.
|
Any
law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
|
|
|
|
(8)
|
was
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), and registered entity (as defined
in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.1(a)(29)), or any equivalent exchange, association, entity or organization
that has disciplinary authority over its members or persons associated with a member.
|
ABSENCE
OF INDEPENDENT DIRECTORS
We
do not have any independent directors and are unlikely to be able to recruit and retain any independent directors due to our small
size and limited financial resources.
DIRECTOR
QUALIFICATIONS
We
do not have a formal policy regarding director qualifications. In the opinion of Peter J. Smith, our President and majority shareholder,
both Mr. Taddei and he have sufficient business experience and integrity to carry out the Company’s plan of operations.
Both Mr. Smith and Mr. Taddei recognize that the Company will have to rely on professional advisors, such as attorneys and accountants
with public company experience to assist with compliance with Exchange Act reporting and corporate governance matters.
DIRECTORSHIPS
Enzo
Taddei is a director of Networking Partners, Inc., a company with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
AUDIT
COMMITTEE FINANCIAL EXPERT
Although
we have not established an Audit Committee, the functions of the Audit Committee are currently carried out by our Board of Directors.
FAMILY
RELATIONSHIPS
There
are no family relationships between or among or officers and directors.
CODE
OF BUSINESS CONDUCT AND ETHICS
On
September 2, 2011, we adopted a Code of Business Conduct and Ethics applicable to our officers, including our principal executive
officer, principal financial officer, principal accounting officer or controller and any other persons performing similar functions.
Our Code of Business Conduct and Ethics was designed to deter wrongdoing and promote honest and ethical conduct, full, fair and
accurate disclosure, compliance with laws, prompt internal reporting and accountability to adherence to our Code of Business Conduct
and Ethics. Our Code of Business Conduct and Ethics is posted on our website at http://www.globalequityincusa.com/ in the “Governance”
section. We also intend to disclose any future amendments to, and any waivers from (though none are anticipated), the Code of
Business Conduct and Ethics in the “Governance” section of our website.
ITEM
11.
|
|
EXECUTIVE
COMPENSATION.
|
The
following table sets forth the aggregate compensation paid by the Company and/or its subsidiary, Global Equity Partners Plc.,
to our executive officers and directors of the Company for services rendered during the periods indicated.
SUMMARY
COMPENSATION TABLE
Name
and Principal Position
|
|
|
Year
|
|
|
Salary
($)
|
|
|
|
Note
|
|
|
Bonus
($)
|
|
|
|
Note
|
|
|
Stock
Awards ($)
|
|
|
|
Note
|
|
|
All
other stock compensation (s)
|
|
|
Note
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
J. Smith
|
|
|
2013
|
|
|
$
|
240,000
|
|
|
|
7
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
240,000
|
|
|
|
8
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
480,000
|
|
President,
Chief
|
|
|
2012
|
|
|
$
|
240,000
|
|
|
|
1
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
240,000
|
|
Executive
Officer and Director
|
|
|
2011
|
|
|
$
|
129,959
|
|
|
|
2
|
|
|
$
|
480,000
|
|
|
|
(3)
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
609,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enzo Taddei
|
|
|
2013
|
|
|
$
|
180,000
|
|
|
|
9
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
240,000
|
|
|
|
8
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
420,000
|
|
Chief Financial
|
|
|
2012
|
|
|
$
|
120,000
|
|
|
|
4
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
1,000,000
|
|
|
|
5
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
1,120,000
|
|
Officer, Secretary
and Director
|
|
|
2011
|
|
|
$
|
40,000
|
|
|
|
6
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
40,000
|
|
(1)
|
Represents
$19,800 paid in cash and $220,200 in accrued, but unpaid salary.
|
(2)
|
Represents
$49,959 paid in cash and $80,000 in accrued, but unpaid salary.
|
(3)
|
Represents
the value of 1,000,000 shares of Series “A” Preferred Stock (of the 5,000,000 authorized Series “A”
preferred stock) issued to Peter Smith as a bonus package. Our Board of Directors recognized the hard and fruitful work of
Mr. Smith for the past three years and decided to compensate him with a bonus equivalent to two years of gross salary. Since
the Company did not have the cash resources to pay such bonus, it decided to issue him preferred stock, which the Board of
Directors (after consulting with our accountants) determined to be worth $480,000. The preferred stock is redeemable on December
1, 2013.
|
(4)
|
Represents
$10,000 paid in cash and $110,000 in accrued, but unpaid salary.
|
(5)
|
Represent
400,000 Series “A” preferred shares convertible into 4,000,000 common shares on December 1, 2014 and valued at
$0.25 per share.
|
(6)
|
Represents
$40,000 of accrued, but unpaid salary.
|
(7)
|
Represents
$199,195 paid in cash and $40,805 in accrued, but unpaid salary.
|
(8)
|
Represents
200,000 Series “A” preferred shares paid to both the CEO and the CFO.
|
(9)
|
Represents
$131,548 paid in cash and $48,452 in accrued, but unpaid salary.
|
EMPLOYMENT
AGREEMENTS SUMMARY
PETER
JAMES SMITH:
Mr.
Smith’s employment agreement with the Company was executed on September 1, 2011, and the basic terms were as follows:
|
1.
|
DUTIES
- ASSIGNMENT: Chief Executive Officer (CEO) and Director on Board of Directors
|
|
|
|
|
2.
|
COMPENSATION:
$240,000 per annum, subject to annual review and adjustment of no less than a 5% percentage increase. The salary will be paid
on a monthly basis.
|
|
|
|
|
3.
|
EMPLOYMENT:
The contract commenced on the first day of September, 2011.
|
|
|
|
|
|
(a)
|
Employment
will continue for 36 MONTHS.
|
|
|
|
|
|
|
(b)
|
The
Company and employee agreed to accrue monthly from September 2011 onwards. Payment of the accrued amounts shall commence no
later than January 2, 2012 and payment of the ongoing monthly salary shall commence on the last working day of January 2012.
|
|
|
|
|
|
4.
|
SEVERANCE
PAYMENTS
|
|
|
|
|
|
|
(a)
|
If
Employer terminates this Agreement for any reason other than Disability, Death, Employee shall be entitled to receive, and
Employer shall make, the following severance payments:
|
|
|
|
|
|
|
|
(i)
|
continue
to pay a sum equivalent to SIX MONTHS’ SALARY.
|
|
|
|
|
|
|
(b)
|
If
Employer terminates this Agreement by reason of the Disability of Employee or if this Agreement is automatically terminated
upon the Death of Employee pursuant to Section 3(b), Employee or his estate shall be entitled to receive, and Employer shall
make, the following severance payments:
|
|
|
|
|
|
|
|
(i)
|
continue
to pay a sum equivalent to FIVE YEARS ANNUAL SALARY via the life assurance scheme.
|
This
contract was modified January 1, 2013 on the following terms:
|
1)
|
COMPENSATION:
$180,000 per annum, subject to annual review and adjustment of no less than a 5% percentage
increase. The salary will be paid on a monthly basis. Also, there was a provision to
pay the CEO´s rent in Dubai, calculated at $30,000 per month, starting July 1,
2013.
|
ENZO
TADDEI:
Mr.
Taddei’s employment agreement with the Company was executed on September 1, 2011, and the basic terms were as follows:
|
1.
|
DUTIES
- ASSIGNMENT: Chief Financial Officer (CFO) and Director on Board of Directors
|
|
|
|
|
2.
|
COMPENSATION:
$120,000 per annum, subject to annual review and adjustment of no less than a 5% percentage increase. The salary will be paid
on a monthly basis.
|
|
|
|
|
3.
|
EMPLOYMENT:
The contract commenced on the first day of September, 2011.
|
|
|
|
|
|
|
(a)
|
Employment
will continue for 36 MONTHS.
|
|
|
|
|
|
|
(b)
|
The
Company and employee agreed to accrue monthly from September 2011 onwards. Payment of the accrued amounts shall commence no
later than January 2, 2012 and payment of the ongoing monthly salary shall commence on the last working day of January 2012.
|
|
4.
|
SEVERANCE
PAYMENTS
|
|
|
|
|
(a)
|
If
Employer terminates this Agreement for any reason other than Disability, Death, Employee shall be entitled to receive, and
Employer shall make, the following severance payments:
|
|
|
|
|
|
(i)
|
continue
to pay a sum equivalent to SIX MONTHS’ SALARY.
|
|
|
|
|
(b)
|
If
Employer terminates this Agreement by reason of the Disability of Employee or if this Agreement is automatically terminated
upon the Death of Employee pursuant to Section 3(b), Employee or his estate shall be entitled to receive, and Employer shall
make, the following severance payments:
|
|
|
|
|
|
(i)
|
continue
to pay a sum equivalent to FIVE YEARS ANNUAL SALARY via the life assurance scheme.
|
This
contract was modified January 1, 2013 on the following terms:
|
1)
|
COMPENSATION:
$180,000 per annum, subject to annual review and adjustment of no less than a 5% percentage
increase. The salary will be paid on a monthly basis.
|
STOCK
OPTION AND OTHER COMPENSATION PLANS
Aside
from the employment agreements with Messrs. Smith and Taddei, the Company currently does not have a stock option or any other
compensation plan and we do not have any plans to adopt one in the near future.
In
March 2012, the Company granted 20,000 stock options to David Lonergan in connection with a Bridge Loan and Option Agreement with
Mr. Lonergan. The options are exercisable at $1.00 per share and expire on September 13, 2013. There have been no options granted.
COMPENSATION
OF DIRECTORS
Our
two directors do not receive any compensation for serving as a member of our board of directors, as they are compensated pursuant
to their employment agreements as officers of the Company.
No
retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company
for the benefit of its employees.
There
are no understandings or agreements regarding compensation our management will receive after a business combination that is required
to be included in this table, or otherwise.
INDEMNIFICATION
Article
VII, Section 7 of the Company’s Bylaws provide that the Company shall indemnify its officers, directors, employees and agents
to the fullest extent permitted by the laws of Nevada.
The
Nevada Revised Statutes allow us to indemnify our officers, directors, employees, and agents from any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except under certain circumstances.
Indemnification may only occur if a determination has been made that the officer, director, employee, or agent acted in good faith
and in a manner, which such person believed to be in the best interests of the corporation. A determination may be made by the
shareholders; by a majority of the directors who were not parties to the action, suit, or proceeding confirmed by opinion of independent
legal counsel; or by opinion of independent legal counsel in the event a quorum of directors who were not a party to such action,
suit, or proceeding does not exist.
The
expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by us as
they are incurred and in advance of the final disposition of the action, suit or proceeding, if and only if the officer or director
undertakes to repay said expenses to us if it is ultimately determined by a court of competent jurisdiction that he is not entitled
to be indemnified by us.
The
indemnification and advancement of expenses may not be made to or on behalf of any officer or director if a final adjudication
establishes that the officer’s or director’s acts or omission involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
The
Nevada Revised Statutes allow a company to indemnify our officers, directors, employees, and agents from any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except under certain circumstances.
Indemnification may only occur if a determination has been made that the officer, director, employee, or agent acted in good faith
and in a manner, which such person believed to be in the best interests of the corporation. A determination may be made by the
stockholders; by a majority of the directors who were not parties to the action, suit, or proceeding confirmed by opinion of independent
legal counsel; or by opinion of independent legal counsel in the event a quorum of directors who were not a party to such action,
suit, or proceeding does not exist.
SECURITIES
AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the company, we have been advised by our special securities counsel that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy and is, therefore, unenforceable.
ITEM
12.
|
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
The
following tables set forth the ownership of our common stock and preferred stock by (a) each person known by us to be the beneficial
owner of more than 5% of our outstanding common stock and preferred stock; and (b) by all of named officers and our directors
and by all of our named executive officers and directors as a group. To the best of our knowledge, the persons named have sole
voting and investment power with respect to such shares and are beneficial owners of the shares indicated in the tables, except
as otherwise noted by footnote.
The
information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the
rules of the U.S. Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under
these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to
vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed
to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within
60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may
be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular
date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as
to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding
as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60
days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as
otherwise indicated below, we believe that the beneficial owners of our common stock listed below have sole voting and investment
power with respect to the shares shown.
(a)
Security ownership of certain beneficial owners:
|
|
Name
and Address of
|
|
Amount
and Nature of
|
|
|
|
|
|
|
Percent
of
|
|
Title
of Class
|
|
Beneficial
Owner
|
|
Beneficial
Ownership
|
|
|
|
Notes
|
|
|
Class
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Peter J. Smith,
|
|
|
16,333,334
|
|
|
|
1
|
|
|
|
52.61
|
%
|
|
|
38 Frond “F” Palm Jumeirah,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dubai, UAE.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Enzo Taddei,
|
|
|
5,000,000
|
|
|
|
2
|
|
|
|
16.11
|
%
|
|
|
Avenida Marques del Duero 67,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edificio Bahia 2A,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29670 San Pedro de Alcantara,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malaga, Spain.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Asher Enterprises, Inc.
|
|
|
3,250,000
|
|
|
|
3
|
|
|
|
10.47
|
%
|
|
|
1 Linden Place
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Neck, N.Y. 11021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr.
Smith is the direct beneficial owner of, and has sole dispositive and voting power over,
these shares.
|
|
(2)
|
Mr.
Taddei is the direct beneficial owner of, and has sole dispositive and voting power over,
these shares.
|
|
(3)
|
Pursuant
to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, Asher
Enterprises, Inc. is the beneficial owner of these shares, which consist of shares of
Common Stock that Asher Enterprises, Inc. has the right to acquire by way of conversion
of a promissory note, subject to the Company’s right to repay the note prior to
conversion thereof into Common Stock.
|
Title of Class
|
|
Name and Address of
Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
|
Percent of Class
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
Peter J. Smith,
|
|
|
1,200,000
|
(1)
|
|
|
60.50
|
%
|
|
|
38 Frond “F” Palm, Jumeirah,
Dubai, U.A.E.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
Enzo Taddei,
|
|
|
600,000
|
(2)
|
|
|
30.25
|
%
|
|
|
Avenida Marques del Duero 67,
Edificio Bahia 2A,
29670 San Pedro de Alcantara,
Malaga, Spain.
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr.
Smith is the direct beneficial owner of, and has sole dispositive and voting power over,
these shares.
|
|
(2)
|
Mr.
Taddei is the direct beneficial owner of, and has sole dispositive and voting power over,
these shares.
|
(b)
Security ownership of management:
Title
of Class
|
|
Name
of Beneficial Owner
|
|
Amount
and Nature of
Beneficial Ownership
|
|
|
Percent
of Class
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Peter J. Smith
|
|
|
16,333,334
|
(1)
|
|
|
52.61
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Enzo Taddei
|
|
|
5,000,000
|
(2)
|
|
|
16.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
All officers and directors as a group (2 persons)
|
|
|
21,333,334
|
|
|
|
68.72
|
%
|
|
(1)
|
Mr.
Smith is the direct beneficial owner of, and has sole dispositive and voting power over,
these shares.
|
|
(2)
|
Mr.
Taddei is the direct beneficial owner of, and has sole dispositive and voting power over,
these shares.
|
Title of Class
|
|
Name of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
|
Percent of Class
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
Peter J. Smith
|
|
|
1,200,000
|
(1)
|
|
|
60.50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
Enzo Taddei
|
|
|
600,000
|
(2)
|
|
|
30.25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
All officers and directors as a group (2 persons)
|
|
|
1,400,000
|
|
|
|
90.75
|
%
|
|
(1)
|
Mr.
Smith is the direct beneficial owner of, and has sole dispositive and voting power over,
these shares.
|
|
(2)
|
Mr.
Taddei is the direct beneficial owner of, and has sole dispositive and voting power over,
these shares.
|
(c)
Changes in control:
We
are not aware of any arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent
date result in a change in control of the Company.
ITEM
13.
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
|
Although
we have not adopted formal procedures for the review, approval or ratification of transactions with related persons, we adhere
to a general policy that such transactions should only be entered into if they are on terms that, on the whole, are no more favorable,
or no less favorable, than those available from unaffiliated third parties and their approval is in accordance with applicable
law. Such transactions require the approval of our board of directors.
On
November 30, 2011, the Company issued 5,000,000 shares of Series “A” Preferred Stock to Peter J. Smith, its President,
as consideration for $480,000 as a compensatory bonus. On November 20, 2012, the Board of Directors and Mr. Smith subsequently
agreed that Mr. Smith would retire to treasury 3,466,668 of these Series “A” preferred shares and retain, the balance,
1,533,332 shares. Mr. Smith subsequently gifted 400,000 of these Series “A” preferred shares to Mr. Taddei (CFO of
the Company) and a further 133,332 preferred shares to two other employees of the Company, 66,666 Series “A” preferred
shares each.
ITEM
14.
|
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES.
|
INDEPENDENT
PUBLIC ACCOUNTANTS
(1)
Audit Fees. We paid an aggregate of $18,000 for the audit of our annual financial statements for the year ended December 31, 2013
and quarterly reviews for three quarters, to be paid to our current auditors DeJoya Griffith, LLC during the year 2013. During
the fiscal year ended December 31, 2012, the aggregate fees billed by the Company’s former auditors, Berman & Company,
P.A., for services rendered for the review of the financial statements included in our quarterly reports on Form 10-Q and for
services provided in connection with the statutory and regulatory filings or engagements for 2012, was $23,792. During the fiscal
year ended December 31, 2011, the aggregate fees billed by the Company’s auditors, for services rendered for the audit of
our annual financial statements and the review of the financial statements included in our quarterly reports on Form 10-Q and
for services provided in connection with the statutory and regulatory filings or engagements for 2011, was $20,000, which we paid
in 2012.
(2)
Audit-Related Fees. During fiscal years ended December 31, 2013 and 2012, our auditors did not receive any fees for any audit-related
services other than as set forth in paragraph (1) above.
(3)
Tax Fees. Our auditor’s tax department provided tax compliance, tax advice, or tax planning advice during the fiscal years
ended December 31, 2013 and 2012. For 2012, we paid our auditor $2,065 for this work. During 2013, we did not pay our auditor
for any of these services.
(4)
All Other Fees. None.
(5)
Audit Committee’s Pre-Approval Policies and Procedures.
Effective
May 6, 2003, the Securities and Exchange Commission adopted rules that require that before Principal Accountants are engaged by
us to render any auditing or permitted non-audit related service, the engagement be:
|
●
|
approved
by our audit committee (which consists of our entire board of directors); or
|
|
|
|
|
●
|
entered
into pursuant to pre-approval policies and procedures established by the board of directors, provided the policies and procedures
are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures
do not include delegation of the board of directors’ responsibilities to management.
|
Our
Board of Directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed
and approved by our Board of Directors either before or after the respective services were rendered.
Our
Board of Directors has considered the nature and amount of fees billed by our principal accountants and believes that the provision
of services for activities unrelated to the audit is compatible with maintaining our principal accountants’ independence.
During
the 2013 and 2012 fiscal years, the Company used the following pre-approval procedures related to the selection of our independent
auditors and the services they provide: unanimous consent of all directors via a board resolution.