THIS
IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER WHICH WILL
BE DESCRIBED HEREIN.
| |
By Order of the Board of Directors, |
| |
|
| |
/s/ Mansour Khatib |
| |
Chief Executive Officer |
NOTICE
OF ACTIONS TO BE TAKEN PURSUANT TO THE WRITTEN CONSENT OF STOCKHOLDERS HOLDING A MAJORITY OF THE VOTING SHARES OF THE COMPANY
IN LIEU OF A SPECIAL MEETING OF THE STOCKHOLDERS, DATED JUNE 28, 2022
To
Our Stockholders:
NOTICE
IS HEREBY GIVEN that the following actions will be taken pursuant to a written consent of stockholders holding a majority of the
issued and outstanding voting shares of the Company dated June 28, 2022, in lieu of a special meeting of the stockholders. Such
actions will be taken on or about *, 2022:
| ● | To
amend
the
Company’s
Articles
of
Incorporation,
(the
“Articles
of
Incorporation”)
to
increase
the
number
of
authorized
shares
of
common
stock,
par
value
$0.00001
per
share
(the
“Common
Stock”),
of
the
Company
from
2,000,000,000
shares
to
10,000,000,000
shares. |
| ● | (i)
authorize
the
Company’s
Board
of
Directors
to
effect,
in
its
sole
discretion,
a
reverse
stock
split
of
the
Common
Stock
in
a
ratio
of
up
to
1-for-500
(the
“Reverse
Stock
Split”),
and
(ii)
authorize
the
filing
of
an
amendment
to
the
Company’s
Articles
of
Incorporation
to
implement
the
Reverse
Stock
Split
and
any
other
action
deemed
necessary
to
effectuate
the
Reverse
Stock
Split,
without
further
approval
or
authorization
of
stockholders,
at
any
time
prior
to
December
31,
2023. |
OUTSTANDING
SHARES AND VOTING RIGHTS
As
of the Record Date, the Company’s authorized capitalization consisted of 2,000,000,000 shares of Common Stock, of which
977,741,469 shares were issued and outstanding. Holders of Common Stock
of the Company have no preemptive rights to acquire or subscribe to any of the additional shares of Common Stock. In addition,
the Company has authorized 20,000,000 shares of preferred shares of which 45,000 of Series B Preferred Shares, 700 Series C Preferred
Shares and 20,000 Series H Preferred Shares are presently outstanding.
Series
B Preferred Shares
On
November 1, 2011, the Company and certain creditors entered into a Settlement Agreement (the “Settlement Agreement”)
whereby without admitting any wrongdoing on either part, the parties settled all previous agreements and resolved any existing
disputes. Under the terms of the Settlement Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred
Stock of the Company on a pro-rata basis. Following the issuance and delivery of the shares of Series B Preferred Stock to said
creditors, as well as surrendering the undelivered shares, the Settlement Agreement resulted in the settlement of all debts, liabilities
and obligations between the parties.
The
Series B Preferred Stock has a stated value of $100 per share and is convertible into the Company’s common stock at a conversion
price of $30.00 per share representing 30 posts split common shares. Furthermore, the Series B Preferred Stock votes on an
as converted basis and carries standard anti-dilution rights. These rights were subsequently removed, except in cases of stock
dividends or splits.
As
of March 31, 2022 and December 31, 2021, there were 45,000 Series B Preferred Shares outstanding.
Series
C Preferred Shares
On
April 29, 2011, GV Global Communications, Inc. (“GV”) provided funding to the Company in the aggregate principal amount
of $111,000 (the “Loan”). On September 25, 2012, the Company and GV entered into a Conversion Agreement pursuant to
which the Company agreed to convert the Loan into 10,000 shares of Series C Preferred Stock of the Company, which was approved
by the Board of Directors.
Each
share of Series C Preferred Stock is convertible, at the option of GV, into such number of shares of common stock of the Company
as determined by dividing the Stated Value (as defined below) by the Conversion Price (as defined below). The Conversion Price
for each share is equal to a 50% discount to the average of the lowest three lowest closing bid prices of the Company’s
common stock during the 10-day trading period prior to the conversion with a minimum conversion price of $0.02. The stated value
is $11.00 per share (the “Stated Value”). The Series C Preferred Stock has no liquidation preference, does not pay
dividends and the holder of Series C Preferred Stock shall be entitled to one vote for each share of common stock that the Series
C Preferred Stock shall be convertible into. GV has contractually agreed to restrict its ability to convert the Series C
Preferred Stock and receive shares of the Company’s common stock such that the number of shares of the Company’s common
stock held by it and its affiliates after such conversion does not exceed 4.9% of the then issued and outstanding shares of the
Company’s common stock.
During
the year ended December 31, 2014, GV Global Communications, Inc. converted 7,770 of its Series C Preferred Stock into 120 post-splits.
During the third quarter of 2014, the Company received 42 post-split common shares to adjust the shares issued to reflect
the amount that both they and the Company believed that they were owed. At December 31, 2021 and 2020, GV owns 700 Series
C Preferred Shares.
As
of March 31, 2022 and December 31, 2021, there were 700 Series C Preferred Shares outstanding.
Series
H Preferred Shares
On
June 17, 2019, the Company, AltCorp Trading LLC, a Costa Rica company and a wholly-owned subsidiary of the Company (“AltCorp”),
GBT Technologies, S.A., a Costa Rica company (“GBT-CR”) and Pablo Gonzalez, a shareholder’s representative of
GBT-CR (“Gonzalez”), entered into and closed an Exchange Agreement (the “GBT Exchange Agreement”) pursuant
to which the parties exchanged certain securities. In accordance with the Exchange Agreement, AltCorp acquired 625,000 shares
of GBT-CR representing 25% of its issued and outstanding shares of common stock from Gonzalez in exchange for the issuance of 20,000 shares
of Series H Convertible Preferred Stock of the Company and a Convertible Note in the principal amount of $10,000,000 issued
by the Company (the “Gopher Convertible Note”) as well as additional consideration. The Gopher Convertible Note bears
interest of 6% per annum and is payable at maturity on December 31, 2021. At the election of Gonzalez, the Gopher Convertible
Note can be converted into a maximum of 20,000 shares of Series H Preferred Stock. Each share of Series H Preferred Stock is convertible,
at the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares
of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($10.00
per share). The Series H Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series H Preferred
Stock shall be entitled to one vote for each share of common stock that the Series H Preferred Stock may be convertible into.
Each
share of Common Stock entitles its holder to one vote on each matter submitted to the stockholders.
Pursuant
to Rule 14c-2 under the Securities Exchange Act of 1934, as amended, the actions will not be adopted until a date at least 20
days after the date on which this Information Statement has been mailed to the stockholders. The Company anticipates that the
actions contemplated herein will be effected on or about the close of business on *, 2022.
The
Company has asked brokers and other custodians, nominees and fiduciaries to forward this Information Statement to the beneficial
owners of the Common Stock held of record by such persons and will reimburse such persons for out-of-pocket expenses incurred
in forwarding such material.
This
Information Statement will serve as written notice to stockholders pursuant to Section 78.320 of the Nevada Revised Statutes of
the State of Nevada.
ABOUT
THE INFORMATION STATEMENT
WHAT
IS THE PURPOSE OF THE INFORMATION STATEMENT?
This
Information Statement is being furnished to you pursuant to Section 14 of the Securities Exchange Act of 1934 to notify the Company’s
shareholders as of the close of business on the Record Date of corporate action expected to be taken pursuant to the consents
or authorizations of shareholders representing a majority of the Company’s Common Stock.
Shareholders
holding a majority of the Company’s outstanding voting stock voted in favor of the corporate matters outlined in this Information
Statement, which actions are expected to take place on or before *, 2022. The matter relates to the approval to authorize an increase
in the number of authorized shares of the Company’s Common Stock from 2,000,000,000 shares to 10,000,000,000 shares and
the Reverse Stock Split and the associated filing of the amendment to the Company’s Articles of Incorporation to implement
the Reverse Stock Split and any other action deemed necessary to effectuate the Reverse Stock Split, without further approval
or authorization of stockholders, at any time prior to December 31, 2023.
WHO IS
ENTITLED TO NOTICE?
Each
outstanding share of Common Stock and Preferred Stock as of record on the Record Date will be entitled to notice of each matter
to be voted upon pursuant to consents or authorizations. Shareholders as of the close of business on the Record Date that held
in excess of fifty percent (50%) of the Company’s outstanding voting shares voted in favor of the actions. Under Nevada
corporate law, all the activities requiring shareholder approval may be taken by obtaining the written consent and approval of
more than 50% of the holders of voting stock in lieu of a meeting of the shareholders. No action by the minority shareholders
in connection with the action is required.
WHAT
CONSTITUTES THE VOTING SHARES OF THE COMPANY?
The
voting power entitled to vote on the actions consists of the vote of the holders of a majority of the voting power of the Common
Stock, each of whom is entitled to one vote per share. The Series B Preferred
Shares, Series C Preferred Shares and Series H Preferred Shares will
be entitled to vote on all matters submitted to shareholders of the Company on an as-converted basis.
As of the Record Date, 977,741,469 shares of Common Stock
were issued and outstanding.
WHAT
CORPORATE MATTERS WILL THE SHAREHOLDERS VOTE FOR, AND HOW WILL THEY VOTE?
Shareholders
holding a majority of our voting stock have voted in favor of the following actions:
● To
amend the Company’s Articles of Incorporation to increase the number of authorized shares of common stock of the Company
from 2,000,000,000 shares to 10,000,000,000 shares.
● To
amend the Company’s Articles of Incorporation to implement the Reverse Stock Split and any other action deemed necessary
to effectuate the Reverse Stock Split, without further approval or authorization of stockholders, at any time prior to December
31, 2023.
WHAT
VOTE IS REQUIRED TO APPROVE THE ACTIONS?
The
affirmative vote of a majority of the shares of our voting stock outstanding on the Record Date, is required for approval of the
actions. A majority of the outstanding voting shares of voting stock voted in favor of the actions.
STOCK
OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The
following table sets forth information with respect to the beneficial ownership of the Common Stock as of July 5, 2022 by (i)
each person known by the Company to own beneficially more than 5% of the outstanding Common Stock; (ii) each director of the Company;
(iii) each officer of the Company and (iv) all executive officers and directors as a group. Except as otherwise indicated below,
each of the entities or persons named in the table has sole voting and investment powers with respect to all shares of Common
Stock beneficially owned by it or him as set forth opposite its or his name.
Name
of Beneficial Owner |
Common
Stock
Beneficially
Owned
(1) |
Percentage
of Common Stock (1) |
| Dr.
Danny Rittman (2) |
1,980 |
* |
| Mansour
Khatib (2) |
0 |
-- |
| GBT
Tokenize Corp. (3) |
166,000,000 |
16.98% |
| MetaVerse
Kit Corp.(4) |
500,000,000 |
51.14% |
| |
|
|
| All
Officers and Directors as a Group |
1,980 |
* |
*
Less than 1%.
| (1) |
Beneficial ownership is determined in accordance with the Rule 13d-3(d)(1) of the Exchange Act, as amended and generally includes voting or investment power with respect to securities. Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table. The above is based on 977,741,469 shares of common stock outstanding as of July 5, 2022. |
| (2) |
Current
Officer and/or Director of the Company. |
| (3) |
GBT
Tokenize Corp is a 50/50 joint venture between the Company and Tokenize-It S.A. which was assigned on June 30, 2021 to Magic International Argentina
F.C, S.L. controlled by Sergio Fridman, a third party. Michael
Murray is the director of the joint venture and have voting and dispositive control over the securities held by GBT Tokenize
Corp. |
| (4) |
MetaVerse
Kit Corp. is a 50/50 joint venture between the Company and Ildar Gainulin and Maria Belova. Ildar Gainulin is the director
of the joint venture and have voting and dispositive control over the securities held by MetaVerse Kit Corp. |
No
Director, executive officer, affiliate or any owner of record or beneficial owner of more than 5% of any class of voting securities
of the Company is a party adversary to the Company or has a material interest adverse to the Company.
AMENDMENT
OF THE CERTIFICATE OF INCORPORATION TO
INCREASE
OF AUTHORIZED SHARES
On
June 28, 2022, the majority stockholders holding a majority of the issued and outstanding voting
shares of the Company approved an amendment to the Company’s Articles of Incorporation, to increase the number of authorized
shares of Common Stock from 2,000,000,000 shares to 10,000,000,000 shares. The Company currently has authorized capital stock
of 2,000,000,000 shares of Common Stock and approximately 977,741,469 shares
of Common Stock are outstanding as of July 5, 2022. The Company’s Board of Directors (the
“Board”) believes that the increase in authorized common shares would provide the Company greater flexibility with
respect to the Company’s capital structure for such purposes as additional equity financings, and stock based acquisitions.
The
terms of the additional shares of Common Stock will be identical to those of the currently outstanding shares of Common Stock.
However, because holders of Common Stock have no preemptive rights to purchase or subscribe for any unissued stock of the Company,
the issuance of additional shares of Common Stock will reduce the current stockholders’ percentage ownership interest in
the total outstanding shares of Common Stock. This amendment and the creation of additional shares of authorized Common Stock
will not alter the current number of issued shares. The relative rights and limitations of the shares of Common Stock will remain
unchanged under this amendment.
As
of *, 2022, a total of 977,741,469
shares of the Company’s currently authorized 2,000,000,000 shares of Common Stock are issued and outstanding. The increase
in the number of authorized but unissued shares of Common Stock would enable the Company, without further stockholder approval,
to issue shares from time to time as may be required for proper business purposes, such as raising additional capital for ongoing
operations, business and asset acquisitions, stock splits and dividends, present and future employee benefit programs and other
corporate purposes.
The
proposed increase in the authorized number of shares of Common Stock could have a number of effects on the Company’s stockholders
depending upon the exact nature and circumstances of any actual issuances of authorized but unissued shares. The increase could
have an anti-takeover effect, in that additional shares could be issued (within the limits imposed by applicable law) in one or
more transactions that could make a change in control or takeover of the Company more difficult. For example, additional shares
could be issued by the Company so as to dilute the stock ownership or voting rights of persons seeking to obtain control of the
Company, even if the persons seeking to obtain control of the Company offer an above-market premium that is favored by a majority
of the independent shareholders. Similarly, the issuance of additional shares to certain persons allied with the Company’s
management could have the effect of making it more difficult to remove the Company’s current management by diluting the
stock ownership or voting rights of persons seeking to cause such removal. The Company does not have any other provisions in its
certificate or incorporation, by-laws, employment agreements, credit agreements or any other documents that have material anti-takeover
consequences. Additionally, the Company has no plans or proposals to adopt other provisions or enter into other arrangements,
except as disclosed below, that may have material anti-takeover consequences. The Board is not aware of any attempt, or contemplated
attempt, to acquire control of the Company, and this proposal is not being presented with the intent that it be utilized as a
type of anti- takeover device.
Stockholders
should recognize that, as a result of this proposal, they will own a fewer percentage of shares with respect to the total authorized
shares of the Company, than they presently own, and will be diluted as a result of any issuances contemplated by the Company in
the future.
Except
as set forth below, there are currently no plans, arrangements, commitments or understandings for the issuance of the additional
shares of Common Stock which are proposed to be authorized:
Series
B Preferred Shares
On
November 1, 2011, the Company and certain creditors entered into a Settlement Agreement (the “Settlement Agreement”)
whereby without admitting any wrongdoing on either part, the parties settled all previous agreements and resolved any existing
disputes. Under the terms of the Settlement Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred
Stock of the Company on a pro-rata basis. Following the issuance and delivery of the shares of Series B Preferred Stock to said
creditors, as well as surrendering the undelivered shares, the Settlement Agreement resulted in the settlement of all debts, liabilities
and obligations between the parties.
The
Series B Preferred Stock has a stated value of $100 per share and is convertible into the Company’s common stock at a conversion
price of $30.00 per share representing 30 posts split common shares. Furthermore, the Series B Preferred Stock votes on an
as converted basis and carries standard anti-dilution rights. These rights were subsequently removed, except in cases of stock
dividends or splits.
As
of March 31, 2022 and December 31, 2021, there were 45,000 Series B Preferred Shares outstanding.
Series
C Preferred Shares
On
April 29, 2011, GV Global Communications, Inc. (“GV”) provided funding to the Company in the aggregate principal amount
of $111,000 (the “Loan”). On September 25, 2012, the Company and GV entered into a Conversion Agreement pursuant to
which the Company agreed to convert the Loan into 10,000 shares of Series C Preferred Stock of the Company, which was approved
by the Board of Directors.
Each
share of Series C Preferred Stock is convertible, at the option of GV, into such number of shares of common stock of the Company
as determined by dividing the Stated Value (as defined below) by the Conversion Price (as defined below). The Conversion Price
for each share is equal to a 50% discount to the average of the lowest three lowest closing bid prices of the Company’s
common stock during the 10-day trading period prior to the conversion with a minimum conversion price of $0.02. The stated value
is $11.00 per share (the “Stated Value”). The Series C Preferred Stock has no liquidation preference, does not pay
dividends and the holder of Series C Preferred Stock shall be entitled to one vote for each share of common stock that the Series
C Preferred Stock shall be convertible into. GV has contractually agreed to restrict its ability to convert the Series C
Preferred Stock and receive shares of the Company’s common stock such that the number of shares of the Company’s common
stock held by it and its affiliates after such conversion does not exceed 4.9% of the then issued and outstanding shares of the
Company’s common stock.
During
the year ended December 31, 2014, GV Global Communications, Inc. converted 7,770 of its Series C Preferred Stock into 120 post-splits.
During the third quarter of 2014, the Company received 42 post-split common shares to adjust the shares issued to reflect
the amount that both they and the Company believed that they were owed. At December 31, 2021 and 2020, GV owns 700 Series
C Preferred Shares.
As
of March 31, 2022 and December 31, 2021, there were 700 Series C Preferred Shares outstanding.
Series
H Preferred Shares
On
June 17, 2019, the Company, AltCorp Trading LLC, a Costa Rica company and a wholly-owned subsidiary of the Company (“AltCorp”),
GBT Technologies, S.A., a Costa Rica company (“GBT-CR”) and Pablo Gonzalez, a shareholder’s representative of
GBT-CR (“Gonzalez”), entered into and closed an Exchange Agreement (the “GBT Exchange Agreement”) pursuant
to which the parties exchanged certain securities. In accordance with the Exchange Agreement, AltCorp acquired 625,000 shares
of GBT-CR representing 25% of its issued and outstanding shares of common stock from Gonzalez in exchange for the issuance of 20,000 shares
of Series H Convertible Preferred Stock of the Company and a Convertible Note in the principal amount of $10,000,000 issued
by the Company (the “Gopher Convertible Note”) as well as additional consideration. The Gopher Convertible Note bears
interest of 6% per annum and is payable at maturity on December 31, 2021. At the election of Gonzalez, the Gopher Convertible
Note can be converted into a maximum of 20,000 shares of Series H Preferred Stock. Each share of Series H Preferred Stock is convertible,
at the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares
of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($10.00
per share). The Series H Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series H Preferred
Stock shall be entitled to one vote for each share of common stock that the Series H Preferred Stock may be convertible into.
$10,000,000
for Igor 1 Corp (Prior year - GBT Technologies S. A.)
In
accordance with the acquisition of GBT-CR the Company issued a convertible note in the principal amount of $10,000,000. The convertible
note bears interest of 6% per annum and is payable at maturity on December 31, 2021. At the election of the holder, the convertible
note can be converted into a maximum of 20,000 shares of Series H Preferred Stock. Each share of Series H Preferred
Stock is convertible, at the option of the holder but subject to the Company increasing its authorized shares of common stock,
into such number of shares of common stock of the Company as determined by dividing the Stated Value ($500 per share) by
the conversion price ($500.00 per share). This convertible note may convert into shares of the Company’s common stock
at a conversion price equal to 85% of the lowest trading price with a 20-day look back immediately preceding the date of
conversion and therefore recorded as derivative liability.
On
May 19, 2021, the Company, Gonzalez, GBT-CR and IGOR 1 Corp entered into a Mutual Release and Settlement Agreement and Irrevocable
Assignment of outstanding balance plus accrued interest (the “Gonzalez Agreement”). Pursuant to the Gonzalez Agreement,
without any party admission of liability and to avoid litigation, the parties has agreed to (i) extend the GBT convertible note
maturity date to December 31, 2022, (ii) amend the GBT convertible note terms to include a beneficial ownership blocker of 4.99%
and a modified conversion feature to the GBT convertible note with 15% discount to the market price during the 20 trading day
period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT
convertible note by Gonzalez to a third party. As a result of the change in terms of this convertible note, the Company took a
charge related to the modification of debt of $13,777,480 during the year ended December 31, 2021. This convertible note
is recorded as derivative liability because of the discounted price on conversion.
During
the year ended December 31, 2021, IGOR 1 converted $1,284,600 of the convertible note into 4,185,650 shares of the Company’s
common stock. Also, on June 24, 2021, the Company transferred 5,500,000 SURG shares received as repayment of $660,000 of this
convertible note.
As
of March 31, 2022, the note had an outstanding balance of $8,055,400 and accrued interest of $1,664,447.
Redstart
Holdings Corp
On
September 21, 2021, the Company entered into a Securities Purchase Agreement with Redstart pursuant to which the Company issued
to Redstart a Convertible Promissory Note (the “Redstart Note No. 7”) in the aggregate principal amount of $244,500
for a purchase price of $203,750. The Redstart Note No. 7 has a maturity date of December 22, 2022 and the Company has
agreed to pay interest on the unpaid principal balance of the Redstart Note No. 7 at the rate of two and a half percent (2.5%)
per annum from the date on which the Redstart Note No. 7 is issued (the “Issue Date”) until the same becomes due and
payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the
Redstart Note No. 7, provided it makes a payment including a prepayment to Redstart as set forth in the Redstart Note No. 7. The
transactions described above closed on September 28, 2021. The outstanding principal amount of the Redstart Note No. 7 may not
be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day,
Redstart may convert the Redstart Note No. 7 into shares of the Company’s common stock at a conversion price
equal to 85% of the lowest trading price with a 20-day look back immediately preceding the date of conversion. Since the conversion
price will vary based on the Company’s stock price, the beneficial conversion feature associated with this note is accounted
for as a derivative liability. In addition, upon the occurrence and during the continuation of an Event of Default (as defined
in the Redstart Note No. 7), the Redstart Note No. 7 shall become immediately due and payable and the Company shall pay to Redstart,
in full satisfaction of its obligations hereunder, additional amounts as set forth in the Redstart Note No. 7. During the three
months ended March 31, 2022, Redstart converted $35,000 of its convertible note into 369,198 shares of the Company’s
common stock. As of March 31, 2022, the note had an outstanding balance of $209,500 and accrued interest of $3,091. As of
filing of this report, the Redstart Note No. 7 was fully paid off by converting into the Company’s common shares.
Sixth
Street Lending LLC
On
November 8, 2021, the Company entered into a Securities Purchase Agreement with Sixth Street Lending LLC (“Sixth Street”)
pursuant to which the Company issued to Sixth Street a Convertible Promissory Note (the “Sixth Street Note”) in the
aggregate principal amount of $124,200 for a purchase price of $103,500. The Sixth Street Note has a maturity date of February
8, 2023 and the Company has agreed to pay interest on the unpaid principal balance of the note at the rate of six percent
(6%) per annum from the date on which the note is issued (the “Issue Date”) until the same becomes due and payable,
whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the note, provided
it makes a payment including a prepayment to Sixth Street as set forth in the Sixth Street Note. The outstanding principal amount
of the note may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following
the 180th day, Sixth Street may convert the note into shares of the Company’s common stock at
a conversion price equal to 85% of the average of the two lowest trading prices with a 20-day look back immediately preceding
the date of conversion. Since the conversion price will vary based on the Company’s stock price, the beneficial conversion
feature associated with this note is accounted for as a derivative liability. In addition, upon the occurrence and during the
continuation of an Event of Default (as defined in the Sixth Street Note), the note shall become immediately due and payable and
the Company shall pay to Sixth Street, in full satisfaction of its obligations hereunder, additional amounts as set forth in the
Sixth Street Note. As of March 31, 2022, the note had an outstanding balance of $124,200 and accrued interest of $2,899.
As of filing of this report, the Sixth Street Note was fully paid off by converting into the Company’s common shares.
On
May 5, 2022, the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC (former name Sixth Street
Lending, LLC), an accredited investor (“DL”), pursuant to which the Company issued to DL a Convertible Promissory
Note (the “DL Note”) in the aggregate principal amount of $244,500 for a purchase price of $203,500. The DL Note has
a maturity date of August 4, 2023 and the Company has agreed to pay interest on the unpaid principal balance of the DL Note at
the rate of six percent (6.0%) per annum from the date on which the DL Note is issued (the “Issue Date”) until the
same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the
right to prepay the DL Note at any time from the Issue Date and continuing through 180 days following the Issue Date, provided
it makes a payment including a prepayment premium to DL as set forth in the DL Note. The transactions described above funded on
May 9, 2022. The outstanding principal amount of the DL Note may not be converted prior to the period beginning on the date that
is 180 days following the Issue Date. Following the 180th day, DL may convert the DL Note into shares of the
Company’s common stock at a conversion price equal to 85% of the lowest
trading price during the 20-day period immediately preceding the date of conversion. In addition, upon the occurrence and during
the continuation of an Event of Default (as defined in the DL Note), the DL Note shall become immediately due and payable and
the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note.
In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock
beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company. Unless
the Company shall have first delivered to DL, at least 48 hours prior to the closing of any equity (or debt with an equity component)
financing in an amount less than $150,000 (“Future Offering”), written notice describing the proposed Future Offering
and providing the Buyer an option during the 48 hour period following delivery of such notice to DL the securities being offered
in the Future Offering on the same terms as contemplated by such Future Offering then the Company is restricted from conducting
the Future Offering during the period beginning on the Issue Date and ending nine months following the Issue Date.
Stanley
Hills LLC
The
Company entered into a series of loan agreements with Stanley Hills LLC (“Stanley”) pursuant to which it received
more than $1,000,000 in loans (the “Debt”) since May 2019 up to December 2019. On February 26, 2020, in order
to induce Stanley to continue to provide funding, the Company and Stanley entered into a letter agreement providing that the current
note payable balance due to Stanley in the amount of $1,214,900 may be converted into shares of common stock of the Company
at a conversion price equal to 85% multiplied by the lowest one trading price for the common stock during the 20-trading day period
ending on the latest complete trading day prior to the conversion date. Since the conversion price will vary based on the Company’s
stock price, the beneficial conversion feature associated with this note is accounted for as a derivative liability. Stanley has
agreed to restrict its ability to convert the Debt and receive shares of common stock such that the number of shares of common stock
held by it and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and
outstanding shares of common stock. During the year ended December 31, 2021, Stanley converted $1,231,466 of its convertible
note plus interest into 4,420,758 shares of the Company’s common stock, and during the year ended December 31,
2021, Stanley loaned the Company an additional $325,000. Also, during the year ended December 31, 2021, the Company transferred
the SURG shares received as repayment of $800,000 of this convertible note and also converted $126,003 of accrued interest
into the principal balance. During the year ended December 31, 2021, Gonzalez assigned all his accrued balances of $424,731 to
Stanley in a private transaction. The balance of the Stanley debt at March 31, 2022 and December 31, 2021 was $116,605 and
$116,605, respectively. The unpaid interest of the Stanley debt at March 31, 2022 and December 31, 2021 was $11,247 and $8,372,
respectively. The Stanley debt was secured via a pledge agreement on the SURG shares.
$8,340,000
Senior Secured Redeemable Convertible Debenture
On
December 3, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with Discover Growth Fund,
LLC (the “Investor”) pursuant to which the Company issued a Senior Secured Redeemable Convertible Debenture (the “Debenture”)
in the aggregate face value of $8,340,000. In connection with the issuance of the Debenture and pursuant to the terms of the SPA,
the Company issued a Common Stock Purchase Warrant to acquire up to 225,000 shares of common stock for a term of three
years (the “Warrant”) on a cash-only basis at an exercise price of $100.00 per share with respect to 50,000 Warrant
Shares, $75.00 with respect to 75,000 Warrant Shares and $50.00 with respect to 100,000 Warrant Shares. The holder may not exercise
any portion of the Warrants to the extent that the holder would own more than 4.99% of the Company’s outstanding common
stock immediately after exercise. The outstanding principal amount may be converted at any time into shares of the Company’s common
stock at a conversion price equal to 95% of the Market Price less $5.00 (the conversion price is lowered by 10% upon the
occurrence of each Triggering Event – the current conversion price is 75% of the Market Price less $5.00). The Market Price
is the average of the 5 lowest individual daily volume weighted average prices during the period the Debenture is outstanding.
On May 28, 2019, the Investor delivered to the Company a “Notice of Default and Notice of Sale of Collateral” (the
“Notice”). On December 23, 2019, in arbitration between the Company and the Investor, an Interim Award was entered
in favor of the Investor. On January 31, 2020, the Company was informed that a final award was entered (the “Final Award”).
The Final Award affirms that certain sections of the Debenture constitute unenforceable liquidated damages penalties and
were stricken. Further, it was determined that the Investor was entitled to recovery of their attorney’s fees. Consequently,
the arbitrator awarded Investor an award of $4,034,444 plus interest of 7.25% accrued from May 15, 2019 and costs in
the amount of $55,613. On February 18, 2020, the Company filed a motion with the United States District Court District of Nevada
(the “Nevada Court”) to confirm the Final Award and a motion to consolidate Investor’s application to confirm
the Final Award filed in the U.S. District Court of the Virgin Islands (Case No: 3 :20-cv-00012-CVG-RM) (the “Virgin Island
Court”). On February 27, 2020, the Nevada Court denied the Company’s motion to confirm the Final Award and motion
to consolidate and further decided that the confirmation of the Final Award should be litigated in the Virgin Island Court. As
such, on February 27, 2020, the Company filed a Notice of Entry of Order as well as a Motion to Confirm the Arbitration Award,
address the outstanding issues regarding whether Investor’s rights are subordinated to other creditors and, thereafter,
oversee a commercially reasonable foreclosure sale (Case No: 3 :20-cv-00012-CVG-RM). It was the Company’s position that
the Final Award must first be confirmed and all questions regarding the rights of Investor relative to those of other creditors
must be determined before any foreclosure sale can proceed. It is further the position of the Company that the previously disclosed
foreclosure sale scheduled by Investor is being conducted in a commercially unreasonable manner and that if Discover proceeded
forward with the foreclosure sale it did so at its own risk. Nevertheless, on February 28, 2020, Investor advised that it conducted
a sale of the Company’s assets. As the date of this report Investor failed to present a deed of sale for the alleged sale
that allegedly took place as noticed. The Company filed with Virgin Island Court the motions disputing the validity of the alleged
sale. On July 28, 2020, Investor filed in the State of Nevada a motion for attorneys $48,844 and costs $716. The Company
filed an answer on August 11, 2020. On October 16, 2020, Investor motion for attorneys $48,844 and costs $716 was
denied. The balance was included in accounts payable for the unearned settlement. As of March 31, 2022, this case is still pending
with the Federal court and the Court has not taken any substantive action in the matter as of the date hereof.
APPROVAL
OF REVERSE STOCK SPLIT
On
June 28, 2022, the majority stockholders holding a majority of the issued and outstanding voting shares of the Company approved
an amendment to the Certificate of Incorporation to effectuate a Reverse Stock Split at an exchange ratio of up to 1-for-500 (or
more plainly stated, up to every 500 existing shares would be exchanged for one new share) as the Board may determine in its sole
discretion.
The
Reverse Stock Split will have no effect on the par value of the Company’s Common Stock. No fractional shares will be issued
in connection with the Reverse Stock Split.
The
Company’s Common Stock is currently quoted on the Pink Current Information tier of the OTC Market Group, Inc. under the
symbol “GTCH”.
The
Board may elect not to implement the approved Reverse Stock Split at its sole discretion. The Board has the maximum flexibility
to react to current market conditions and to therefore achieve the purposes of the Reverse Stock Split, if implemented, and to
act in the best interests of and its stockholders.
The
Board intends to effectuate the Reverse Stock Split at any time prior to December 31, 2023 (the “Effective Split Time”).
Purpose
of the Reverse Stock Split
The
Board believes that a Reverse Stock Split is desirable for a number of reasons, including:
Improve
the marketability and liquidity of the Common Stock. The reason to pursue the Reverse Stock Split is because the
Company believes that the increased market price of its Common Stock expected as a result of implementing the Reverse Stock Split
may improve the marketability and liquidity of its Common Stock and may encourage interest and trading in its Common Stock. The
Reverse Stock Split could allow a broader range of institutions to invest in Common Stock (namely, funds that are prohibited from
buying stocks whose price is below a certain threshold), potentially increasing the liquidity of its Common Stock. The Reverse
Stock Split could help increase analyst and broker interest in Common Stock as their policies can discourage them from following
or recommending companies with low stock prices. Because of the trading volatility often associated with low-priced stocks, many
brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced
stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies
and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Additionally,
because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions
on higher-priced stocks, the current average price per share of the Company’s Common Stock can result in individual stockholders
paying transaction costs representing a higher percentage of their total share value than would be the case if the share price
were substantially higher. However, the liquidity of the Common Stock may in fact be adversely affected by the proposed Reverse
Stock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split.
Risks
of the Reverse Stock Split
The
Reverse Stock Split may not increase the Company’s market capitalization, which would prevent the Company from realizing
some of the anticipated benefits of the Reverse Stock Split. The immediate effect of the Reverse Stock Split would
be to reduce the number of shares of outstanding Common Stock and to potentially increase the trading price of the Company’s
Common Stock. However, the effect of any effected Reverse Stock Split upon the market price of the Common Stock cannot be predicted,
and the history of reverse stock splits for companies in similar circumstances sometimes improves stock performance, but in many
cases does not. There can be no assurance that the trading price of the Common Stock after the Reverse Stock Split will rise in
proportion to the reduction in the number of shares of the Company’s Common Stock outstanding as a result of the Reverse
Stock Split or remain at an increased level for any period. Also, there is no assurance that the stock price would not decline
below the anticipated stock price following the Reverse Stock Split. The trading price of the Common Stock may change due to a
variety of other factors, including’s operating results, other factors related to the Company’s business and general
market conditions. In addition, the fewer number of shares that will be available to trade will possibly cause the trading market
of the Common Stock to become less liquid, which could have an adverse effect on the price of the Common Stock.
Effects
of the Reverse Stock Split
Reduction
of Shares Held by Individual Stockholders. After the Effective Split Time, each Common Stockholder will own fewer shares
of the Company’s Common Stock. However, the Reverse Stock Split will affect all of the Common Stockholders uniformly and
will not affect any Common Stockholder’s percentage ownership interests in the Company, except to the extent that the Reverse
Stock Split results in any of its stockholders owning a fractional share as described below. Any fractional share shall be rounded
up to the nearest whole share.
Authorized
Shares of Common Stock. The Reverse Stock Split, if implemented, would not change the number of authorized shares
of the Common Stock as designated by the Articles. Therefore, because the number of issued and outstanding shares of Common Stock
would decrease, the number of shares remaining available for issuance under ‘s authorized shares of Common Stock would increase.
The
additional shares of Common Stock that would become available for issuance if the Reverse Stock Split is implemented could also
be used by the Company’s management to oppose a hostile takeover attempt or delay or prevent changes of control or changes
in or removal of management, including transactions that are favored by a majority of the stockholders or in which the stockholders
might otherwise receive a premium for their shares over then-current market prices or benefit in some other manner. Although the
proposed Reverse Stock Split has been prompted by business and financial considerations, stockholders nevertheless should be aware
that this action could facilitate future efforts by Company’s management to deter or prevent a change in control.
Other
Effects on Outstanding Shares. If the Reverse Stock Split is implemented, the rights and preferences of the outstanding
shares of the Common Stock would remain the same after the Reverse Stock Split. Each share of Common Stock issued pursuant to
the Reverse Stock Split would be fully paid and non-assessable.
In
addition to the above, the Reverse Stock Split will have the following effects upon the Company’s Common Stock:
| ● |
The number of shares owned by each holder of Common Stock will be reduced; |
| |
|
| ● |
The per share loss and net book value of the Common Stock will be increased because there will be a lesser number of shares of Common Stock outstanding; |
| |
|
| ● |
The par value of the Common Stock will remain $0.00001 per share; |
| |
|
| ● |
The stated capital on the Company’s balance sheet attributable to the Common Stock will be decreased and the additional paid-in capital account will be credited with the amount by which the stated capital is decreased; and |
| |
|
| ● |
All outstanding options, warrants, Preferred Stock and convertible securities entitling the holders thereof to purchase shares of Common Stock, if any, will enable such holders to purchase, upon exercise thereof, fewer of the number of shares of Common Stock which such holders would have been able to purchase upon exercise thereof immediately preceding the Reverse Stock Split, at the same total price (but a higher per share price) required to be paid upon exercise or conversion thereof immediately preceding the Reverse Stock Split. The voting rights of the Preferred Stock will also be proportionally adjusted. |
Shares
of Common Stock after the Reverse Stock Split will be fully paid and non-assessable. The amendment will not change any of the
other the terms of the Common Stock. The shares of Common Stock after the Reverse Stock Split will have the same voting rights
and rights to dividends and distributions and will be identical in all other respects to the shares of Common Stock prior to the
Reverse Stock Split.
Once
the Reverse Stock Split is implemented, share certificates representing shares of Common Stock will continue to be valid. In the
future, new share certificates will be issued reflecting the Reverse Stock Split, but this in no way will affect the validity
of your current share certificates. The Reverse Stock Split will occur without any further action on the part of the Company’s
stockholders. After the Effective Split Time, each share certificate representing the Common Stock prior to the Reverse Stock
Split will be deemed to represent a smaller number of shares than the number presently shown on any such certificate.
The
actual number of outstanding shares of the Company’s Common Stock after giving effect to the Reverse Stock Split, if and
when effected will depend on the number of issued and outstanding shares at the time the Reverse Stock Split is effected and the
Reverse Stock Split ratio that is ultimately determined by the Board. The table below shows the Reverse Stock Split ratio and
the approximate number of authorized shares of Common Stock to be outstanding for various reverse split ratios:
| Reverse Stock Split Ratio |
Outstanding Shares of Common Stock Before the Reverse Split |
Outstanding Shares of Common Stock Before the Reverse Split |
| 1 for 100 |
977,741,469 |
9,777,415 |
| 1 for 250 |
977,741,469 |
3,910,966 |
| 1 for 500 |
977,741,469 |
1,955,483 |
___________
| |
(1) |
Does not account for the additional issuance of shares of Common Stock after the date hereof as the result of future financings, conversion of outstanding derivative securities or other issuances, which may be substantial. |
| |
|
|
| |
(2) |
Does not account for fractional share rounding. |
Certificates
representing the shares after the Reverse Stock Split will be issued in due course as share certificates representing shares prior
to the Reverse Stock Split are tendered for exchange or transfer to the Company’s transfer agent. The Company requests
that stockholders not send in any of their stock certificates at this time.
As
applicable, new share certificates evidencing new shares following the Reverse Stock Split that are issued in exchange for share
certificates issued prior to the Reverse Stock Split representing old shares that are restricted shares will contain the same
restrictive legend as on the old certificates. Also, for purposes of determining the term of the restrictive period applicable
to the new shares after the Reverse Stock Split, the time period during which a stockholder has held their existing pre-Reverse
Stock Split old shares will be included in the total holding period.
Procedure
for Implementing the Reverse Stock Split
The
Reverse Stock Split will become effective upon the filing of the amendment to the Articles with the Nevada Secretary of State.
The timing of the filing of the amendment that will effectuate the Reverse Stock Split will be determined by the Board, at any
time prior to December 31, 2023, based on its evaluation as to when such action will be the most advantageous to the Company and
its stockholders. In addition, the Board reserves the right, notwithstanding stockholder approval and without further action by
the stockholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to filing the amendment, the Board,
in its sole discretion, determines that it is no longer in the Company’s best interest and the best interests of its stockholders
to proceed with the Reverse Stock Split. If the amendment effectuating the Reverse Stock Split has not been filed with the Secretary
of State of Nevada by the close of business December 31, 2023, the Board will abandon the Reverse Stock Split.
As
soon as practicable after the Reverse Stock Split, the Company’s transfer agent will act as exchange agent for purposes
of implementing the exchange of stock certificates for record holders (i.e., stockholders who hold their shares directly in their
own name and not through a broker). Record holders of pre-Reverse Stock Split shares will be asked to surrender to the transfer
agent certificates representing pre-Reverse Stock Split shares in exchange for a book entry with the transfer agent or certificates
representing post-Reverse Stock Split shares in accordance with the procedures to be set forth in a letter of transmittal to be
sent by the Company. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s
outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent.
For
street name holders of pre-Reverse Stock Split shares (i.e., stockholders who hold their shares through a broker), your broker
will make the appropriate adjustment to the number of shares held in your account following the Effective Split Time.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
No
service charges, brokerage commissions or transfer taxes will be payable by any stockholder, except that if any new stock certificates
are to be issued in a name other than that in which the surrendered certificate(s) are registered it will be a condition of such
issuance that (1) the person requesting such issuance pays all applicable transfer taxes resulting from the transfer (or prior
to transfer of such certificate, if any) or establishes to ‘s satisfaction that such taxes have been paid or are not payable,
(2) the transfer complies with all applicable federal and state securities laws, and (3) the surrendered certificate is properly
endorsed and otherwise in proper form for transfer.
Fractional
Shares
No
fractional shares of Common Stock will be issued as a result of the Reverse Stock Split. Instead, stockholders who otherwise would
be entitled to receive fractional shares, upon surrender to the exchange agent of such certificates representing such fractional
shares, will receive a number of shares rounded up to the nearest whole share.
Accounting
Matters
The
par value per share of the Company’s Common Stock will remain unchanged at $0.00001 per share after the Reverse Stock Split.
As a result, at the Effective Split Time, the stated capital on the Company’s consolidated balance sheet attributable to
Common Stock will be reduced and the additional paid-in-capital account will be increased by the amount by which the stated capital
is reduced. Per share net income or loss will be increased because there will be fewer shares of Common Stock outstanding. The
Company does not anticipate that any other accounting consequences, including changes to the amount of stock-based compensation
expense to be recognized in any period, will arise as a result of the Reverse Stock Split.
Certain
Federal Income Tax Consequences
Each
stockholder is advised to consult their own tax advisor as the following discussion may be limited, modified or not apply based
on your own particular situation.
The
following is a summary of important tax considerations of the Reverse Stock Split. It addresses only stockholders who hold the
pre-Reverse Stock Split shares and post-Reverse Stock Split shares as capital assets. It does not purport to be complete and does
not address stockholders subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies,
dealers in securities, mutual funds, foreign stockholders, stockholders who hold the pre-Reverse Stock Split shares as part of
a straddle, hedge, or conversion transaction, stockholders who hold the pre-Reverse Stock Split shares as qualified small business
stock within the meaning of Section 1202 of the Internal Revenue Code of 1986, as amended (the “Code”), stockholders
who are subject to the alternative minimum tax provisions of the Code, and stockholders who acquired their pre-Reverse Stock Split
shares pursuant to the exercise of employee stock options or otherwise as compensation. This summary is based upon current law,
which may change, possibly even retroactively. It does not address tax considerations under state, local, foreign, and other laws.
Furthermore, the Company has not obtained a ruling from the Internal Revenue Service or an opinion of legal or tax counsel with
respect to the consequences of the Reverse Stock Split.
The
Reverse Stock Split is intended to constitute a reorganization within the meaning of Section 368 of the Code. Assuming the Reverse
Stock Split qualifies as reorganization, a stockholder generally will not recognize gain or loss on the Reverse Stock Split. The
aggregate tax basis of the post-Reverse Stock Split shares received will be equal to the aggregate tax basis of the pre-Reverse
Stock Split shares exchanged (excluding any portion of the holder’s basis allocated to fractional shares), and the holding
period of the post-Reverse Stock Split shares received will include the holding period of the pre-Reverse Stock Split shares exchanged.
PLEASE
CONSULT YOUR OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE
STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.
To ensure
compliance with Treasury Department Circular 230, each holder of Common Stock is hereby notified that: (a) any discussion of U.S.
federal tax issues in this information statement is not intended or written to be used, and cannot be used, by such holder for
the purpose of avoiding penalties that may be imposed on such holder under the Code; (b) any such discussion has been included
by in furtherance of the Reverse Stock Split on the terms described herein and (c) each such holder should seek advice based on
its particular circumstances from an independent tax advisor.
No
Appraisal Rights
Under
the NRS, stockholders are not entitled to appraisal rights with respect to the proposed amendment to the Articles to effectuate
the Reverse Stock Split.
Anti-Takeover
Effects of the Reverse Stock Split
The
overall effect of the Reverse Stock Split may be to render more difficult the accomplishment of mergers or the assumption of control
by a principal stockholder and thus make the removal of management more difficult.
The
effective increase in the Company’s authorized and unissued shares as a result of the Reverse Stock Split could potentially
be used by the Board to thwart a takeover attempt. The over-all effects of this might be to discourage, or make it more difficult
to engage in, a merger, tender offer or proxy contest, or the acquisition or assumption of control by a holder of a large block
of the Company’s securities and the removal of incumbent management. The Reverse Stock Split could make the accomplishment
of a merger or similar transaction more difficult, even if it is beneficial to stockholders. The Board might use the additional
shares to resist or frustrate a third-party transaction, favored by a majority of the independent stockholders that would provide
an above-market premium, by issuing additional shares to frustrate the takeover effort.
As
discussed above, the reasons for the Reverse Stock Split include the potential increase of the ability of institutions to purchase
the Company’s Common Stock and the interest in its Common Stock by analysts and brokers. This Reverse Stock Split is not
the result of management’s knowledge of an effort to accumulate securities or to obtain control of the Company by means
of a merger, tender offer, solicitation or otherwise.
Additionally,
the Reverse Stock Split is not being conducted in an effort to take the Company private.