The accompanying
notes are an integral part of these consolidated financial statements.
The accompanying
notes are an integral part of these consolidated financial statements.
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
Note
1 - Basis of Presentation
The
accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission
for interim financial information. Accordingly, they do not include all the information and disclosures necessary for a comprehensive
presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that all
material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements
presentation.
The
unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form
10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis,
for the year ended December 31, 2015. The interim results for the period ended March 31, 2016 are not necessarily indicative of
results for the full fiscal year.
Note
2 - Nature of Operations
Global
Equity Partners, Plc. (“GEP”), a private company, was organized under the laws of the Republic of Seychelles on September
2, 2009. Global Equity International Inc. (the “Company” or “GEI”), a reporting company since June 21,
2012, was organized under the laws of the state of Nevada on October 1, 2010. On November 15, 2010, GEP executed a reverse recapitalization
with GEI. On August 22, 2014, we formed a Dubai subsidiary of Global Equity Partners Plc. called GE Professionals DMCC. Global
Equity Partners Plc. is the parent company of its 100% subsidiary GE Professionals DMCC (Dubai).
Revenue
is generated from business consulting services, introduction fees, employment placements and equity participation.
Note
3 - 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.
As
reflected in the accompanying consolidated financial statements, the Company had a net income of $487,744 and net cash provided
by operations of $9,540 for the three months ended March 31, 2016; and a working capital deficit of $2,050,775 and stockholders´
equity of $1,036,382 as of March 31, 2016. Some of these factors raise substantial doubt about the Company’s ability to
continue as a going concern.
The
ability for the Company to continue its operations is primarily dependent on:
|
a)
|
Continually
engaging with new clients which over the years has become consistent.
|
|
|
|
|
b)
|
Consummating
and executing current engagements.
|
Whilst
the Company´s current engagements are being consummated and executed, the Company may also have to resort to borrowing additional
funds with certain related parties, such as management, and also third party funders on a non-discounted basis (if for shares,
on a fixed price basis) to sustain the Company’s existence. In addition, in the event that operating cash flows are slowed,
the Company would reduce its overheads wherever possible and any monies owed to the management can also be forgiven, if necessary.
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
The
Company´s deferred revenue, $535,000 at March 31, 2016, is non-refundable hence once certain contractual milestones are
achieved or contractual terms pass over time, as applicable, on each individual engagement a proportion of deferred revenue will
become revenue for the Company and therefore no cash outlays are required for these liabilities.
It
is important to note that the two largest debts (The Able Foundation loan & Eden loan) stated on our current liabilities are
non-collateralized and non-convertible loans.
Note
4 - Summary of Significant Accounting Policies
Principles
of Consolidation
Global
Equity International Inc. is the parent company of its 100% subsidiary Global Equity Partners Plc and Global Equity Partners Plc.
is the parent company of its 100% subsidiary, GE Professionals DMCC (Dubai). 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.
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. Significant estimates in the accompanying financial statements include allowance for
doubtful accounts and loans, estimates of fair value of securities received for services, depreciation of fixed assets, derivative
valuations and equity valuations for non-cash transactions.
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 March
31, 2016 and at December 31, 2015, respectively; the Company had no cash equivalents.
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
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.
Foreign
currency policy
The
Company’s accounting policies related to the consolidation and accounting for foreign operations are as follows: The accompanying
consolidated financial statements are presented in U.S. dollars. The functional currency of the Company’s Dubai subsidiary
is the Arab Emirates Dirham (AED). All foreign currency balances and transactions are translated into United States dollars “$”
and/or “USD” as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the
balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period.
Equity transactions are translated at each historical transaction date spot rate. Translation adjustments arising from the use
of different exchange rates from period to period are included as a component of our stockholders’ equity (deficit) as “Accumulated
other comprehensive income (loss)”. Since the AED is tagged to the U.S. dollar, translation gains and losses are always
de minimis
, therefore a statement of comprehensive income (loss) is not presented. Gains and losses resulting from foreign
currency transactions are included in the statement of operations.
Investments
(A)
Classification of Securities
Marketable
Securities
At
the time of the acquisition, a marketable 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.
Any
unrealized gains and losses are reported as a component of other comprehensive income (loss). Realized gains (losses) are computed
on a specific identification basis and are reflected in the statement of operations.
Cost
Method Investments
Securities
that are not classified as marketable securities are accounted for under the cost method. These securities are recorded at their
original cost basis and are subject to impairment testing.
(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 did not record any permanent
impairment during the three months ended March 31, 2016 or 2015.
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
Fixed
Assets
Fixed
assets are 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 statements.
Beneficial
Conversion Feature
For
conventional convertible debt where the rate of conversion is below market value, the Company records any “beneficial conversion
feature” (“BCF”) intrinsic value as additional paid in capital and related debt discount.
When
the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective
debt instrument. The discount is 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 financing costs and debt discounts in connection with raising funds through the issuance
of debt whether convertible or not. 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
If
debt is issued with an original issue discount, the original issue discount is recorded to debt discount, reducing the face amount
of the note and is amortized to interest expense over the life of the debt.
Revenue
Recognition
We
recognize revenue from the services we provide in accordance with ASC Topic 605,
Revenue Recognition
. ASC Topic 605 sets
forth guidance as to when revenue is realized or realizable and earned, which is generally, when all of the following criteria
are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been performed; (3) the
seller’s price to the buyer is fixed or determinable; and (4) collectability is reasonably assured. Generally, the contract
terms for these services are relatively short in duration.
We
receive consideration in the form of cash and/or securities.
We
recognize cash consideration as revenues as the services are performed either on a pro rata basis or on a milestone basis.
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
Securities
received as consideration are often earned at a point in time when the specified event occurs and the securities are issued to
us. Therefore, we measure and recognize these securities received at fair value on the date of receipt. If securities are received
in advance of completion of our services, the fair value will be recorded as deferred revenue and recognized as revenue as the
services are competed.
All
revenues are generated from clients whose operations are based outside of the United States.
At
March 31, 2016 the Company had the following concentrations of accounts receivable with customers:
Customer
|
|
|
March 31, 2016
|
|
|
|
|
|
|
PDI
|
|
|
|
54.14
|
%
|
EEC
|
|
|
|
45.86
|
%
|
|
|
|
|
100
|
%
|
The
Company had no accounts receivable at December 31, 2015.
For
the three months ended March 31, 2016 and 2015, the Company had the following concentrations of revenues with customers:
Customer
|
|
|
March
31, 2016
|
|
|
March
31, 2015
|
|
|
|
|
|
|
|
|
|
SAC
|
|
|
|
0
|
%
|
|
|
100
|
%
|
PDI
|
|
|
|
36.65
|
%
|
|
|
0
|
%
|
QFS
|
|
|
|
54.16
|
%
|
|
|
0
|
%
|
INSCX
|
|
|
|
4.74
|
%
|
|
|
0
|
%
|
GPL
|
|
|
|
1.19
|
%
|
|
|
0
|
%
|
EEC
|
|
|
|
3.26
|
%
|
|
|
0
|
%
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
Deferred
Revenue
Deferred
revenue represents fees that have been received by the Company for requested services that have not been completed. Following
table illustrates the movement in deferred revenue during the three months ended March 31, 2016 and the year ended December 31,
2015:
Balance, December 31, 2015
|
|
$
|
839,130
|
|
New payments received in Q1 2016
|
|
|
50,000
|
|
Cash
deferred revenue recognized as revenue in Q1 2016
|
|
|
(77,500
|
)
|
Securities
deferred revenue recognized as revenue in Q1 2016
|
|
|
(276,630
|
)
|
Balance, March 31, 2016
|
|
$
|
535,000
|
|
Share-based
payments
The
Company recognizes all forms of share-based payments to employees, 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.
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
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 as of the measurement date. Amounts received
prior to the measurement date are adjusted to fair value at each reporting period until a measurement date is achieved.
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 is 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 which are based upon our historical volatility.
|
|
|
|
|
●
|
The
forfeiture rate is based on historical experience.
|
Earnings
per Share
The
basic net 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 are computed by dividing net income (loss) by the
weighted average number of shares of common stock and common stock equivalents outstanding during the period.
As
at March 31, 2016, the Company had 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 Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
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 are based on the short-term nature of these instruments.
The
Company measures its derivative liabilities at fair market value on a recurring basis and measures its non-marketable securities
at fair value on a non-recurring basis. Consequently, the Company may have gains and losses reported in the statement of operations.
The
following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis at March
31, 2016 and December 31, 2015, using quoted prices in active markets for identical assets (Level 1), significant other observable
inputs (Level 2), and significant unobservable inputs (Level 3):
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
Level 3 – Non-Marketable Securities – Non-recurring
|
|
$
|
3,069,472
|
|
|
$
|
2,650,471
|
|
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 investments
in equity securities held in private companies.
Management
believes that an “other-than-temporary impairment” would 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.
|
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.
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
Changes
in Level 3 assets measured at fair value for the three months ended March 31, 2016 were as follows:
Balance, December 31, 2015
|
|
$
|
2,650,471
|
|
Realized and unrealized gains (losses)
|
|
|
-
|
|
Securities received for services during the period
|
|
|
419,365
|
|
Sales and settlements during the period
|
|
|
(364
|
)
|
Impairment loss
|
|
|
-
|
|
Balance, March 31, 2016
|
|
$
|
3,069,472
|
|
Recent
Accounting Pronouncements
There
are no new accounting pronouncements that have any impact on the Company’s financial statements other than discussed below:
In
March 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-08,
”Principal versus
Agent Considerations (Reporting Revenue Gross versus Net),”
which makes targeted improvements to clarify the principal
versus agent assessment and are intended to make the guidance more operable and lead to more consistent application. The amendments,
however, do not eliminate the significant judgments related to principal versus agent assessments. This guidance is effective
for calendar year-end in 2018 for interim and annual reporting periods. The Company is currently evaluating the impact this guidance
will have on its Consolidated Balance Sheet.
Note
5 – Investments
The
Company holds following common equity securities in private and reporting companies:
|
|
3/31/2016
|
|
|
12/31/2015
|
|
|
|
Company
|
|
No. of Shares
|
|
|
Book value
|
|
|
No. of Shares
|
|
|
Book value
|
|
|
Status
|
M1 Lux AG
|
|
|
2,000,000
|
|
|
$
|
-
|
|
|
|
2,000,000
|
|
|
$
|
-
|
|
|
Private Company
|
Monkey Rock Group Inc.
|
|
|
1,500,000
|
|
|
$
|
-
|
|
|
|
1,500,000
|
|
|
$
|
-
|
|
|
Reporting Company – OTC
|
Voz Mobile Cloud Limited
|
|
|
3,200,000
|
|
|
$
|
-
|
|
|
|
3,200,000
|
|
|
$
|
-
|
|
|
Private Company
|
Arrow Cars International Inc.
|
|
|
3,000,000
|
|
|
$
|
3,000
|
|
|
|
3,000,000
|
|
|
$
|
3,000
|
|
|
Reporting Company – OTC
|
Direct Security Integration Inc.
|
|
|
400,000
|
|
|
$
|
-
|
|
|
|
400,000
|
|
|
$
|
-
|
|
|
Private Company
|
Duo World Inc.
|
|
|
3,460,000
|
|
|
$
|
865,000
|
|
|
|
3,460,000
|
|
|
$
|
865,000
|
|
|
Private Company
|
Primesite Developments Inc.
|
|
|
5,606,521
|
|
|
$
|
1,781,521
|
|
|
|
5,606,521
|
|
|
$
|
1,781,521
|
|
|
Private Company
|
Quartal Financial Solutions AG
|
|
|
2,271
|
|
|
$
|
419,365
|
|
|
|
-
|
|
|
|
-
|
|
|
Private Company
|
|
|
|
19,166,521
|
|
|
$
|
3,068,886
|
|
|
|
19,166,521
|
|
|
$
|
2,649,521
|
|
|
|
The
Company holds following preferred equity securities in private companies:
|
|
3/31/2016
|
|
|
12/31/2015
|
|
|
|
Company
|
|
No. of Shares
|
|
|
Book value
|
|
|
No. of Shares
|
|
|
Book value
|
|
|
Status
|
Duo World Inc.
|
|
|
136,600
|
|
|
$
|
136
|
|
|
|
500,000
|
|
|
$
|
500
|
|
|
Private Company
|
Primesite Developments Inc.
|
|
|
450,000
|
|
|
$
|
450
|
|
|
|
450,000
|
|
|
$
|
450
|
|
|
Private Company
|
|
|
|
586,600
|
|
|
$
|
586
|
|
|
|
950,000
|
|
|
$
|
950
|
|
|
|
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
On
February 08, 2016, the Company entered into an agreement with Yenom (Pvt) Limited where the Company agreed to pay an equity commission,
for the introduction of a client to the Company, in the form of transfer of 363,400 preferred shares (valued at $0.005 per share)
of Duo World Inc. out of the 500,000 preferred shares which were owned by the Company at the year ended December 31, 2015. As
a result of this transfer, the Company’s investment in preferred shares of Duo World Inc. was reduced to 136,600 preferred
shares as on March 31, 2016 and a gain of $1,454 was recorded on transfer of this preferred stock.
On
March 29, 2016, the Company received 1,815 common shares valued at CHF 160 or $163.89 and 456 common shares valued at CHF 261
or $267.34 from a private company and client having a fair market value of $419,365 that is treated as a cost method investment.
The value of the cost method investment pertains to receipt of agreed common stock in a private company in which the best evidence
of value was based on the management representation of that private company.
At
March 31, 2016, there were no identifiable events or changes in circumstances that had a significant adverse effect on the value
of the investments; hence, no impairment is required as at March 31, 2016.
Note
6 – Fixed Assets
The f
ollowing
table reflects net book value of fixed assets as at March 31, 2016 and December 31, 2015:
|
|
03/31/2016
|
|
|
12/31/2015
|
|
|
Useful Life
|
Furniture and Equipment
|
|
$
|
37,655
|
|
|
$
|
37,204
|
|
|
3 to 5 years
|
Accumulated depreciation
|
|
$
|
(19,970
|
)
|
|
$
|
(17,123
|
)
|
|
|
Net fixed assets
|
|
$
|
17,685
|
|
|
$
|
20,081
|
|
|
|
Depreciation
expense for the three months ended March 31, 2016 and March 31, 2015, was $2,848 and $2,752, respectively.
Note
7 – Debt & Accounts payables
(A) Accounts
payable and accrued liabilities
The
following table represents breakdown of accounts payable and accrued liabilities as of March 31, 2016 and December 31, 2015, respectively:
|
|
3/31/2016
|
|
|
12/31/2015
|
|
Accrued salaries and benefits
|
|
$
|
89,788
|
|
|
$
|
79,386
|
|
Other payables & accrued liabilities
|
|
|
343,217
|
|
|
|
293,607
|
|
|
|
$
|
433,005
|
|
|
$
|
372,993
|
|
(B) Accounts
payable and accrued liabilities – related parties
The
following table represents the accounts payable to related parties as of March 31, 2016 and December 31, 2015, respectively:
|
|
3/31/2016
|
|
|
12/31/2015
|
|
Salaries
|
|
$
|
319,308
|
|
|
$
|
152,875
|
|
Expenses
|
|
|
58,137
|
|
|
|
50,734
|
|
|
|
$
|
377,445
|
|
|
$
|
203,609
|
|
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
(C)
Related party – short term loans payable
The
Company received loans from two of its officers and directors. The loans are non-interest bearing, unsecured and due on demand.
The following table represents the loans payable activity as of March 31, 2016:
Short term loans payable – related party – December 31, 2015
|
|
$
|
-
|
|
Proceeds from loans
|
|
|
5,724
|
|
Repayments
|
|
|
(700
|
)
|
Converted to common stock
|
|
|
-
|
|
Short term loans payable – related party –
March 31, 2016
|
|
$
|
5,024
|
|
(D)
Notes payable
Following
is the summary of all non-convertible notes, net of debt discount, including the accrued interest as at March 31, 2016:
Date
of Note
|
|
|
Principal
|
|
|
|
Accrued
Interest
|
|
|
|
Total
payable
|
|
October
9, 2013
|
|
|
$
|
120,420
|
|
|
$
|
106,196
|
|
|
$
|
226,616
|
|
October
17, 2013
|
|
|
|
319,598
|
|
|
|
160,402
|
|
|
|
480,000
|
|
November
26, 2013
|
|
|
|
-
|
|
|
|
37,971
|
|
|
|
37,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2016
|
|
|
$
|
440,018
|
|
|
$
|
304,569
|
|
|
$
|
744,587
|
|
|
●
|
On
October 9, 2013, the Company secured a two month loan for GBP 75,000 (equivalent to $120,420)
with the un
derstanding
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 a five month extension. This stock compensation was issued to the lender also
on December 12, 2013. This loan is currently in default. Total accrued interest as at
March 31, 2016 is $106,196. The Company also accrued $184,656 provision for potential
damages due to the ongoing litigation in the Dubai Courts as of March 31, 2016 which
is included in accounts payable and accrued liabilities in the accompanying consolidated
balance sheet. (See Note 10)
|
Loan granted in 2013
|
|
$
|
120,420
|
|
Interest accrued in 2013
|
|
|
56,196
|
|
Balance at December 31, 2013
|
|
$
|
176,616
|
|
|
|
|
|
|
Interest accrued in 2014
|
|
|
50,000
|
|
Balance at December 31, 2014
|
|
$
|
226,616
|
|
|
|
|
|
|
Interest accrued in 2015
|
|
|
-
|
|
Potential damages accrued in 2015
|
|
|
184,656
|
|
Balance at December 31, 2015
|
|
$
|
411,272
|
|
Interest accrued in Q1 2016
|
|
|
-
|
|
Balance at March 31, 2016
|
|
$
|
411,272
|
|
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
|
●
|
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 principal plus 5% per month interest on
or before January 18, 2014. The note holder received, as a form of guarantee, 1,600,000
shares of Direct Security Integration Inc. and the note holder is currently trying to
sell these shares. The shares used as a form of guarantee formed part of the assets of
our Company.
|
On
September 18, 2015, the Company and the note holder agreed to amend the previous terms of the agreement and both parties agreed
on the new terms whereby the company is now liable to pay $500,000 as full and final payment of the October 17, 2013 loan principal,
accrued interest, and all other related penalties. This repayment will not accrue any further interest or penalties. As a result,
the Company has reversed the excess accrued interest and monitoring fee payable amounting to $660,578 recognized as a gain on
settlement; leaving the principal loan balance of $319,598 and accrued interest balance $180,402 of as on September 30, 2015.
On
December 21, 2015, the company repaid first installment of the accrued interest amounting to $20,000; leaving the accrued interest
balance of $160,402 and principal loan balance $319,598 of as on December 31, 2015. The next two
quarterly
installments of $50,000 each, as per the amended agreement, have not been paid as of March 31, 2016 and the total outstanding
balance owed to the lender is $480,000 as of March 31, 2016.
Loan granted in 2013
|
|
$
|
319,598
|
|
Interest accrued in 2013
|
|
|
39,602
|
|
Balance at December 31, 2013
|
|
$
|
359,200
|
|
|
|
|
|
|
Interest accrued in 2014
|
|
|
390,197
|
|
Balance at December 31, 2014
|
|
$
|
749,397
|
|
|
|
|
|
|
Monitoring fee accrual
|
|
|
124,175
|
|
Interest accrued in 2015
|
|
|
287,006
|
|
Interest repayment
|
|
|
(20,000
|
)
|
Excess interest and monitoring fee gain
|
|
|
(660,578
|
)
|
Balance at December 31, 2015
|
|
$
|
480,000
|
|
Interest accrued in Q1 2016
|
|
|
-
|
|
Balance at March 31, 2016
|
|
$
|
480,000
|
|
(E)
Fixed price convertible note payable
On
August 27, 2015, the Company secured a six month non-convertible loan for $135,000 carrying an original issue discount of $30,000.
In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued
o
n the outstanding principal balance unless an
event of default occurs.
During
the three months ended March 31, 2016, $1,667 of the debt issuance costs and $10,000 of the debt discount balance was amortized
to interest expense, leaving an unamortized issue cost and discount balance of $0.
On
March 18, 2016, the Company entered into an exchange agreement with the same lender whereby original purchase agreement dated
August 27, 2015 was exchanged with the new agreement to extend the loan repayment term until April 17, 2016. The total exchange
price for $135,000 of principal of the Old Note was as follows:
Global
Equity International, Inc. and Subsidiaries
Notes
to the Consolidated Financial Statements
March
31, 2016
(Unaudited)
|
●
|
$135,000
principal of New Note, and
|
|
|
|
|
●
|
an
issuance of 1,000,000 common shares to the lender as exchange shares.
|
Also,
in the new note, there was an addition of a conversion option that the lender has right at any time after the exchange date until
the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the
Company at a fixed conversion price of $0.025. There is no beneficial conversion feature as the conversion price is higher than
the current market value of the GEQU stock. Since a conversion option was added to the note in the March 18, 20
16
modification, this modification is accounted for as a debt extinguishment on that date and $25,200 was recognized as loss on debt
extinguishment. (See Note 8)
Subsequent
to the three months ended March 31, 2016, on April 28, 2016, St. George decided not to opt for converting the principal loan to
common shares. Instead, on April 28, 2016, the Company renegotiated the loan terms, further extending the repayment to July 1,
2016. The terms of this further extension were a one-off 10% interest payment of $13,500 to be added to the principal of $135,000
and the issuance of 3,000,000 common shares. The Company accounted for this further extension as a debt extinguishment of previous
extension dated March 18, 2016 and $58,200 was recognized as loss on debt extinguishment comprising of $13,500 of interest payment
and $44,700 for issuance of 3,000,000 common shares of the Company valued at a fair value of $0.0149 on the date of new exchange.
Note
8 - Stockholders’ Equity
a)
Preferred Stock
On
November 30, 2011, the Company authorized and designated 5,000,000 Series “A” convertible preferred shares. 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
|
At
March 31, 2016 there were no Series “A” preferred shares issued.
b)
Common
Stock
During
the three months ended March 31, 2016, the Company issued 1,000,000 common shares valued at a fair value of $0.0252 per share
or
$25,200 in lieu of exchange fee for a loan
note. See Note 7(E).