NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(UNAUDITED)
NOTE 1 - ORGANIZATION
Organization and Business
Global Arena Holding, Inc. (formerly, “Global Arena Holding Subsidiary Corp.”) (“GAHI”), was formed in February 2009, in the state of Delaware. GAHI and its subsidiaries (the “Company”) was previously a financial services firm and currently is focusing on the following businesses through these subsidiaries:
On February 25, 2015, Global Election Services, Inc. (“GES”), a wholly owned subsidiary was incorporated in the State of Delaware. GES provides comprehensive technology-enabled election services to organizations such as craft and trade organizations, labor unions, political parties, co-operatives and housing organizations, associations and professional societies, universities, and political organizations. GES has developed proprietary election software for a data storage and retrieval registration system to determine voter eligibility and prevent duplicate votes with In-Person digital signature capture, as well as scanning/tabulation software utilizing advanced OMR/OCR/Barcode imaging software featuring de-skewing, de-speckling and image correction. This system provides 3 types of audit capabilities. The hardware includes high speed optical scanners that are hard lined to a computer with all Wi-Fi disabled so the entire tabulation process occurs offline, eliminating the opportunity for hacking.
On May 20, 2015, the Company incorporated GAHI Acquisition Corp. as a wholly owned entity in the State of Delaware. Currently the Company, along with its software developers, is exploring blockchain technologies for voter registration, tabulation and election balloting.
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the financial condition of the Company and its operating results for the respective periods. The condensed consolidated balance sheet at December 31, 2018 has been derived from the Company's audited consolidated financial statements. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission. The results for the nine months ended September 30, 2019
10
are not necessarily indicative of the results to be expected for the full year ending December 31, 2019.
Going Concern
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates the continuation of the Company as a going concern. The Company has generated recurring losses from operations and cash flow deficits from its operations since inception and has had to continually borrow to continue operating. In addition, certain of the Company’s debt is in default as of September 30, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The continued operations of the Company are dependent upon its ability to raise additional capital, obtain additional financing and/or acquire or develop a business that generates sufficient positive cash flows from operations. The Company continues to raise funds from the issuance of additional convertible promissory note. Management is hopeful that with their ability to raise additional funds that the Company should be able to continue as a going concern.
The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of GAHI and its wholly-owned and majority owned subsidiaries, GES and GAHI Acquisition Corp. All significant intercompany accounts and transactions have been eliminated in consolidation.
Basic and Diluted Earnings (Loss) Per Share
Earnings per share is calculated in accordance with the ASC 260-10, Earnings Per Share. Basic earnings-per-share is based upon the weighted average number of common shares outstanding. Diluted earnings-per-share is based on the assumption that all dilutive convertible notes, stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.
11
|
September 30,
|
|
2019
|
|
2018
|
Options
|
48,000,000
|
|
48,000,000
|
Warrants
|
466,276,590
|
|
461,839,515
|
Convertible notes
|
1,484,245,515
|
|
1,312,368,328
|
Total
|
1,998,522,105
|
|
1,822,207,843
|
Management Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates reflected in the consolidated financial statements include, but are not limited to, share-based compensation, and assumptions used in valuing derivative liabilities. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all demand and time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents.
12
Convertible Debt
Convertible debt is accounted for under FASB ASC 470, Debt – Debt with Conversion and Other Options. The Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt that has conversion features at fixed or adjustable rates that are in-the-money when issued and records the relative fair value of any warrants issued with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to the warrants and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features, both of which are credited to additional paid-in capital. The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing stock options, except that the contractual life of the warrant is used.
Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value of the BCF and warrants are recorded as a debt discount and is accreted over the expected term of the convertible debt as interest expense.
The Company accounts for modifications of its embedded conversion features in accordance with the ASC which requires the modification of a convertible debt instrument that changes the fair value of an embedded conversion feature and the subsequent recognition of interest expense or the associated debt instrument when the modification does not result in a debt extinguishment.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives pursuant to ASC 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The Company uses the Black-Scholes-Merton model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Revenue Recognition
The Company recognizes revenue in accordance with FASB ASC 606, Revenue From Contracts with Customers. The Company earns revenues through various services it provides to its clients. GES’s income is recognized at the presentation date of the certification of the election results. The payments received in advance are recorded as deferred revenue on the balance sheet. Should an election not proceed, all non-refundable deferred revenue will be recognized as revenue.
13
Share-Based Compensation
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 718-10, Compensation – Stock Compensation, and the conclusions reached by ASC 505-50, Equity – Equity-Based Payments to Non-Employees. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment is reached or completion of performance by the provider of goods or services as defined by ASC 505-50.
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurement defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.
Fair Value Measurements
The Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
|
·
|
Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
|
|
·
|
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
|
·
|
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
Cash, accounts payable and accrued expenses and deferred revenue – The carrying amounts reported in the consolidated balance sheets for these items are a reasonable estimate of fair value due to their short term nature.
Promissory notes payable and convertible promissory notes payable – Promissory notes payable and convertible promissory notes payable are recorded at amortized cost. The carrying amount approximates their fair value.
14
The Company uses Level 2 inputs for its valuation methodology for the beneficial conversion feature and warrant derivative liabilities as their fair values were determined by using the Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives.
The following table presents the Company’s assets and liabilities required to be reflected within the fair value hierarchy as of September 30, 2019 and December 31, 2018.
|
|
Fair Value
|
|
Fair Value Measurements at
|
|
|
As of
|
|
September 30, 2019
|
Description
|
|
September 30, 2019
|
|
Using Fair Value Hierarchy
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Beneficial conversion feature
|
$
|
649,285
|
$
|
-
|
$
|
649,285
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
649,285
|
$
|
-
|
$
|
649,285
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
Fair Value Measurements at
|
|
|
As of
|
|
December 31, 2018
|
Description
|
|
December 31, 2018
|
|
Using Fair Value Hierarchy
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Beneficial conversion feature
|
$
|
1,269,238
|
$
|
-
|
$
|
1,269,238
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
1,269,238
|
$
|
-
|
$
|
1,269,238
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
15
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements
In June 2018, the FASB issued Accounting Standards Update (“ASU”) ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , which simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January 1, 2019. Early adoption is permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements as the Company did not have any lease arrangements that were subject to this new pronouncement.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
16
NOTE 3 - INVESTMENT
On October 20, 2015, the Company paid $125,000 in cash and issued to Nikolaos Spanos, 1,377,398 of its common stock (valued at $68,870) and 1,993,911 warrants to purchase its common shares at the exercise price of $0.10 per common share exercisable for three years (valued at $90,400). The common shares and warrants are being issued for the purchase of 1,000,000 common shares of Blockchain Technologies Corporation (“BTC”). Said common shares represent ten percent (10%) of the outstanding equity in BTC. This investment is accounted for under the cost method.
NOTE 4 - PROMISSORY NOTES PAYABLE
In March 2014, the Company issued two promissory notes for a total of $230,000. The interest rate is the short-term applicable federal rate as determined by the Internal Revenue Service for the calendar month plus 10%. These two promissory notes are due on September 30, 2019, as amended. The outstanding balance was $230,000 and $230,000 as of September 30, 2019 and December 31, 2018, respectively.
17
NOTE 5 - CONVERTIBLE PROMISSORY NOTES PAYABLE
Convertible promissory notes payable at September 30, 2019 and December 31, 2018 consist of the following:
|
|
September 30,
|
|
December 31,
|
|
|
2019
|
|
2018
|
Convertible promissory notes with interest at 10% to 12% per annum, convertible into common shares at a fixed price ranging from $0.001 to $0.25 per share. Maturity dates through December 31, 2019, as amended. ($300,000 in default)
|
|
2,429,000
|
|
1,939,000
|
Convertible promissory notes with interest at 12% per annum, convertible into common shares at a price ranging from $0.08 to $0.14 or a 50% to 60% discount from the lowest trade price in the 20-25 trading days prior to conversion (as of September 30, 2019 the conversion price would be $0.0009 to $0.0011 per share). Maturity dates through December 31, 2019, as amended. ($240,157 in default)
|
|
1,124,701
|
|
1,717,701
|
Convertible promissory notes with interest at 8% per annum, convertible into common shares at a fixed price of $0.02 per share. The maturity date is September 30, 2019, as amended.
|
|
203,000
|
|
213,572
|
Convertible promissory notes with interest at 12% per annum, convertible into common shares of GES. The maturity dates through August 7, 2010, as amended. ($417,500 in default)
|
|
867,500
|
|
591,500
|
Total convertible promissory notes payable
|
|
4,624,201
|
|
4,461,773
|
Unamortized debt discount
|
|
(109,966)
|
|
(297,608)
|
Convertible promissory notes payable, net discount
|
|
4,514,235
|
|
4,164,165
|
Less notes receivable collateralized by convertible promissory notes payable
|
|
-
|
|
(525,000)
|
|
|
4,514,235
|
|
3,639,165
|
Less current portion
|
|
(4,514,235)
|
|
(3,639,165)
|
Long-term portion
|
|
-
|
|
-
|
18
During the year ended December 31, 2018, the Company issued convertible promissory notes payable totaling $982,000 to one investor for which the Company received $335,000 in cash and notes receivable from the same investor totaling $575,000. During the year ended December 31, 2018, the Company received $50,000 from a note receivable. These convertible promissory notes payable also contained an original issue discount of $72,000. Since the notes receivable were issued to the Company as payment for certain convertible promissory notes payable, the Company has not presented these notes receivable as an asset, but as an offset to the convertible promissory notes payable balance as the investor has the right of offset. During the nine months ended September 30, 2019, the Company and the investor agreed to cancel convertible promissory notes payable for $525,000 and the notes receivable for $525,000.
A rollfoward of the convertible promissory notes payable from December 31, 2018 to September 30, 2019 is below:
Convertible promissory notes payable, December 31, 2018
|
|
|
$
|
3,639,165
|
Issued for cash
|
|
|
|
826,000
|
Repayment for cash
|
|
|
|
(60,000)
|
Conversion to common stock
|
|
|
|
(78,572)
|
Debt discount related to new convertible promissory notes
|
|
|
|
(314,068)
|
Amortization of debt discounts
|
|
|
|
501,710
|
Convertible promissory notes payable, September 30, 2019
|
|
|
$
|
4,514,235
|
NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS
Certain of the Company’s convertible promissory notes payable are convertible into shares of the Company’s common stock at a percentage of the market price on the date of conversion. The Company has determined that the variable conversion rate is an embedded derivative instrument. The Company uses the Black-Scholes valuation method to value the derivative instruments at inception and on subsequent valuation dates. Weighted average assumptions used to estimate fair values are as follows:
19
|
|
September 30,
|
|
December 31,
|
|
|
2019
|
|
2018
|
Risk-free interest rate
|
|
1.75%
|
|
2.51%
|
Expected life of the options (Years)
|
|
0.01
|
|
0.43
|
Expected volatility
|
|
296%
|
|
314%
|
Expected dividend yield
|
|
0%
|
|
0%
|
|
|
|
|
|
Fair Value
|
$
|
649,285
|
$
|
1,269,238
|
A rollfoward of the derivative liability from December 31, 2018 to September 30, 2019 is below:
Derivative liabilities, December 31, 2018
|
$
|
1,269,238
|
Change in fair value of derivative liabilities
|
|
(619,953)
|
Derivative liabilities, September 30, 2019
|
$
|
649,285
|
NOTE 7- STOCKHOLDERS’ DEFICIT
Series B Preferred Stock
Pursuant to the Company’s Certificate of Incorporation, the Company has authorized 2,000,000 shares of $0.001 par value Preferred Stock. The Company has designated 250,000 of the 2,000,000 shares as Series B Preferred Stock. The Series B Preferred stockholders are entitled to a cumulative stock dividend, up to a maximum of 10% additional common stock upon the conversion after one year. The Series B Preferred Stock may be converted into common shares, at any time, at the option of the holder. The conversion price shall be the greater of $0.01 or 90% of the lowest closing price during the five most recent trading days prior to conversion. The number of common shares to be issued shall be the number of Series B Preferred shares times $10 per shares divided by the conversion price.
During the year ended December 31, 2017, the Company sold 90,000 shares of Series B Preferred Stock for cash proceeds of $900,000. During the year ended December 31, 2018, 30,000 of these preferred shares were converted into 30,743,885 shares of common stock
Common Stock
On April 28, 2016 the stockholders approved an amendment to the Company’s articles of incorporation to increase the number of authorized common shares from 100,000,000 to 1,000,000,000. In addition, the stockholders also approved an amendment to the Company’s Stock Awards Plan, originally filed June 27, 2011, which will increase the number of shares authorized to be issued under the Plan from 3,000,000 shares to 7,460,000 shares.
20
During the nine months ended September 30, 2019, the Company issued 50,971,221 shares of common stock for convertible notes of $78,572 and accrued interest of $10,572.
Option Activity
A summary of the option activity is presented below:
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
Average
|
|
|
|
|
|
|
Average
|
|
Remaining
|
|
Aggregate
|
|
|
Number of
|
|
Exercise
|
|
Contractual
|
|
Intrinsic
|
|
|
Options
|
|
Price ($)
|
|
Life (in years)
|
|
Value ($)
|
Outstanding, December 31, 2018
|
|
48,000,000
|
|
0.03
|
|
3.80
|
|
-
|
Granted
|
|
-
|
|
|
|
|
|
|
Exercised
|
|
-
|
|
|
|
|
|
|
Forfeited/Canceled
|
|
-
|
|
|
|
|
|
|
Outstanding, September 30, 2019
|
|
48,000,000
|
|
0.03
|
|
3.05
|
|
-
|
Exercisable, September 30, 2019
|
|
48,000,000
|
|
0.03
|
|
3.05
|
|
-
|
|
|
|
|
|
|
|
|
|
21
Warrant Activity
A summary of warrant activity is presented below:
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
Average
|
|
|
|
|
|
|
Average
|
|
Remaining
|
|
Aggregate
|
|
|
Number of
|
|
Exercise
|
|
Contractual
|
|
Intrinsic
|
|
|
Warrants
|
|
Price ($)
|
|
Life (in years)
|
|
Value ($)
|
Outstanding, December 31, 2018
|
|
466,276,590
|
|
0.013
|
|
1.95
|
|
14,560
|
Granted
|
|
104,200,000
|
|
0.004
|
|
|
|
|
Exercised
|
|
-
|
|
|
|
|
|
|
Forfeited/Canceled
|
|
(31,346,665)
|
|
0.040
|
|
|
|
|
Outstanding, September 30, 2019
|
|
539,129,925
|
|
0.010
|
|
1.42
|
|
143,067
|
Exercisable, September 30, 2019
|
|
539,129,925
|
|
0.010
|
|
1.42
|
|
143,067
|
During the nine months ended September 30, 2019, the Company issued a total of 104,200,000 warrants in connection with a new convertible promissory note payable. The fair values of the warrants were determined using the Black-Scholes option pricing model with the following assumptions:
·Expected life of 3 years
·Volatility of 296% - 308%;
·Dividend yield of 0%;
·Risk free interest rate of 1.75% - 2.5%1
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company may be involved in legal proceedings in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.
On October 10, 2013, GACOM settled a complaint with the National Futures Association for a fine of $50,000 for certain noncompliance with Commodity Futures Trading Commission regulations. The fine has not been paid and is included in accounts payable and accrued expenses at September 30, 2019 and December 31, 2018. The Company is currently attempting to adjudicate and settle this fine.
22
On December 26, 2017, the Company entered into a settlement agreement with a prior attorney with regards to outstanding legal fees owed. Pursuant to this settlement agreement, the Company paid $25,000 on January 5, 2018, and $ 25,000 on February 5, 2018, and was required to pay an additional $200,000 during 2018. The $200,000 settlement is in default, and is carried in the accounts payable, however the Company is in the process of settling the outstanding balance.
NOTE 9– AGREEMENTS
On June 28, 2018, the Company entered into an application development and services agreement with Synectic Advisors. Under the terms of the agreement Synectic Advisors will connect the election software programs to the Blockchain. Under the terms of the agreement, the Company will pay $85,000, 4.99% of the Company’s common stock, upon approval of the corporate actions at the 2019 annual meeting, and a 6% net revenue participation. On August 2, 2018 the Company made a $20,000 payment and work is ongoing. As of June 30, 2019, the Company is no longer pursuing this agreement.
On May 13, 2019, the Company entered into a joint venture agreement with Voting Portals, LLC (VP), a Florida limited liability company. Pursuant to this agreement, the joint venture will be making use of the VP online e-voting web portal solutions and proprietary e-voting software programs to service and fulfill GES’s clients’ online elections and other e-voting events pursuant to the terms of the agreement, as well as any other ventures and relationships agreed to pursuant to the goals of the agreement. The Agreement was amended and as part of this agreement, the Company will be issuing 10,000,000 common shares to VP for services rendered, upon approval of the corporate actions at the 2019 annual meeting. VP will own 100% of the rights to the software, while GES will be responsible for all administrative and other election procedures. The Company is in the process of closing this transaction in the 1st quarter of 2020.
On May 13, 2019, the Company amended the master services agreement with HCAS Technologies (the “MSA”), Under the MSA, the Company will be acquiring information technology services and management from HCAS Technologies, as well as retaining Mr. Magdiel Rodriguez to act as Chief Information Officer. Pursuant to this Amended MSA, the Company will issue a total of 30,000,000 warrants to purchase the Company’s common shares at a price of $0.005 as consideration for the services of HCAS and Mr. Magdiel. The Company is in the process of closing this transaction in the 1st quarter of 2020.
On May 10, 2019, the Company entered into an asset purchase agreement with Election Services Solutions, LLC (the “APA”). Under the APA, the Company will purchase 100% of the assets of Election Services Solutions, LLC. The Company will pay $550,000, of which $506,150 has already been paid, and issue 20,000,000 common shares to purchase these assets under this APA. The Company is in the process of closing this transaction in the 1st quarter of 2020.
23
On June 19, 2019, Global Election Services, Inc. signed an engagement letter with Blockchain Valley Ventures (“BVV”) of Zug Switzerland. Under the terms of the agreement, GES will pay BVV 50,000 Swiss Francs (CHF) and BVV will serve as an advisor in connection with a Voter Registration, Voter Authentication, and Voter Eligibility using a Blockchain Platform primarily covering the following matters:
(a) Development and facilitation of an extended workshop with relevant and best in class third party blockchain technology companies such as Phoenix Systems AG, Securosys AG and others as well as any subject matter expert to be invited by Global Election Services Inc.
(b) Development of a high-level technology solution architecture and its requirements for the blockchain based voting registration platform with inputs from third party blockchain technology.
(c) Documentation of the results of (a) and (b) in order to provide the basis of the technical development of the platform.
(d) Development of an implementation recommendation with respect to Voting on the Blockchain Platform.
(e) Legal facilitation with respect to outside tax and legal advisors in connection with compliance with local and international regulation.
(f) Project Management during the engagement.
This will be delivered as a Working Paper discussing a high-level envisaged Blockchain platform, including a foundational flowchart, and implementation recommendation;
BVV is a Crypto Valley, Switzerland based venture capital firm who consists of highly successful entrepreneurs, finance experts, blockchain technology experts and ICO experienced analysts and consultants. The documents created will be used by GES, to create a Minimal Viable Product. This Product, along with GES licensing rights on GES existing Registration and Tabulation Software will be owned by GES.
On June 27th 2019 BVV and GES signed and amended agreement calling for a $ 25,000 CHF Payment for the development and facilitation of an extended workshop with relevant and best in class third party blockchain technology companies, and a $ 25,000 CHF payment upon completion of the engagement. GES made payments of $ 25,000 CHF payment.
24
On September 12, 2019, representatives of GES attended a Blockchain workshop in Zurich Switzerland to discuss the specifics of using the Blockchain in the Elections Industry. GES representatives met with a Blockchain Technology Companies who have technology solution architecture and its requirements for the blockchain based on a voting registration platform. Currently this Blockchain Development is still being developed and GES and BVV are working on a Working Paper discussing a high-level envisaged Blockchain platform, including a foundational flowchart, and implementation recommendation.
On June 15, 2019 Global Election Services Inc., (“GES”) entered into a Term Sheet to create a joint venture with TrueVote, Inc. Under the terms of the agreement GES will invest $50,000 into a 24 Month Debenture and issue a 3 year warrant exercisable at $0.01 for 4,500,000 common shares of Global Arena Holding Inc., (“GAHC”). GAHC will receive 3 million common shares of TrueVote, representing 30% of TrueVote Inc.
TrueVote, Inc. is building a comprehensive end-to-end, de-centralized, completely digital voting system. This will be based on traditional, proven database methodologies, and layered with a "checksum" that's posted on the Blockchain, proving all data is immutable and unalterable. This design will ensure that every vote is transparently counted and verifiable.
Upon the closing of the agreement, GES will have invested $50,000 into a 24 Month Debenture and will have issued a 3 year warrant exercisable at $0.01 for 4,500,000 common shares of the Company, and the Company will receive 3,000,000 common shares of TrueVote Inc. as part of the joint venture between the companies. The Company on December 17, 2019 paid $ 40,000 to True Vote. As of the date of this filing the Company will pay an additional $ 10,000 and a 3 year warrant exercisable at $0.01 for 4,500,000 common shares of the Company, in the 1st quarter of 2020.
On June 7, 2019, the Company’s second subsidiary, GAHI Acquisition Corp. (GAHI) was authorized by the Board of Directors of GAHC to infuse an initial deposit of $50,000 into the subsidiary for general capital and administrative expenses. GAHI will be repurposed in order to explore potential new business ventures in an effort to increase shareholder value. GAHC will cause GAHI to explore opportunities in the energy and minerals business, which may provide investment opportunities, including the possibility of providing blockchain technology software to energy and mineral companies. The Company added Mr. Jason N. Old to the GAHI Acquisition Board as a Director.
25
On November 28, 2019 the Board of Directors of GAHC authorized the termination of the transaction previously authorized to infuse an initial deposit of $50,000 into GAHI for general capital and administrative expenses and have GAHI repurposed in order to explore opportunities in the energy and minerals business, which may provide investment opportunities, including the possibility of providing blockchain technology software to energy and mineral companies. GAHI Acquisition will remain a 100% subsidiary of Global Arena Holding Inc. and will focus on Blockchain related Companies for Investments and Acquisition.
NOTE 10– SUBSEQUENT EVENTS
Subsequent to September 30, 2019, the Company received $300,000 from the issuance of a convertible note and issued 153,846,000 warrants.
On October 11, 2019 the Company’s shareholders approved an increase of the Company’s authorized shares by 1 Billion Common Shares. The Board of Directors John S. Matthews, Martin Doane, and Facundo Bacardi were elected to serve for 2020.
On October 21, 2019 the Company’s subsidiary Global Elections Services was retained to administer the North Dakota Dem-NPL Presidential Primary. GES will be handling a hybrid election where eligible voters in the state of North Dakota will have the option to call a GES managed call center to request a mail ballot for a period leading up to election day. On Election Day, GES will supervise 14 in-person voting locations around the state and upon polls closing, GES will process and tabulate all the ballots and report results for the state’s Democratic nominee. This contract is not material to the Company’s future earnings.
The Board authorized the forming of Tidewater Energy Group Inc. on November 18, 2019, a Delaware C Corporation, and appointed John S. Matthews and Jason Old as Board members. The Company is being formed to explore opportunities in the oil, gas, mineral and energy business.
Tidewater will be authorized to have 40,000,000 million shares in total, par value $0.001.
Tidewater will issue 10,000,000 million common shares to the following individuals:
-Global Arena Holding Inc. 5,100,000 common shares. (51%)
-Thomas Kivisto 3,150,000 common shares. (31.5%)
-Jason Old 1,250,000 common shares (12.5)
-Thirty-One Ten Investments 500,000 common shares (5%)
The Company invested $50,000 into Tidewater Energy Group Inc. for general capital and administrative expenses. This transaction closed in the 1st Quarter of 2020.
26