UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 10-Q

                Quarterly report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934


For the quarterly period ended March 31, 2022


-OR-
 

                Transition report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934


For the transition period from _______ to _______.

Commission file number 000-49819
 

GLOBAL ARENA HOLDING, INC.

(Exact name of registrant as specified in its charter)
 

Delaware
(State or other jurisdiction of incorporation or organization)

33-0931599
(I.R.S. Employer Identification No.)

 

 

208 East 51 Street, Suite 112

New York, New York
(Address of principal executive offices)

 

10022
(Zip code)

 

(646) 801-5524

 (Registrants telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o
 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes    No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
 

Large accelerated filer

Non-accelerated filer 

Accelerated filer

Smaller reporting company 

 

Emerging growth company 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   No 

 

As of May 23, 2022, the registrant had 2,176,707,372 outstanding shares of common stock.

 






GLOBAL ARENA HOLDING, INC. TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

 

3

 

 

 

Condensed Consolidated Balance Sheets at March 31, 2022 (Unaudited) and December 31, 2021

 

4

 

 

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

5

 

 

 

Condensed Consolidated Statements of Stockholders Equity (Deficit) for the Period Ended March 31, 2022 and 2021 (Unaudited)

 

6

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three months ended March 31, 2022 and 2021 (Unaudited)

 

7

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

8

 

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

24

Item 3. Quantitative and Qualitative Disclosure About Market Risk

 

30

Item 4. Controls and Procedures

 

30

Item 1. Legal Proceedings

 

32

Item 1A. Risk Factors

 

32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

32

Item 3. Defaults Upon Senior Securities

 

32

Item 4. Mine Safety Disclosures

 

33

Item 5. Other Information

 

33

Item 6. Exhibits

 

33

 

 

 

Signatures

 

33

 

2


 

PART I - FINANCIAL INFORMATION

 

This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934. These statements are based on managements beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations.  Forward-looking statements also include statements in which words such as expect, anticipate, intend, plan, believe, estimate, consider, or similar expressions are used.

 



Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

 

3


 

GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,
2022

 

 

December 31,
2021

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

    Cash and cash equivalents

 

$

11,846

 

 

$

13,295

 

 

 

 

 

       Total current assets

 

 

11,846

 

 

 

13,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits for proposed acquisitions

 

 

551,150

 

 

 

551,150

 

 

 

 

 

            TOTAL ASSETS

 

$

562,996

 

 

$

564,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

    Accounts payable

 

$

349,855

 

 

$

366,289

 

 

 

 

 

    Accrued expenses

 

 

3,545,358

 

 

 

3,320,563

 

 

 

 

 

    Convertible promissory notes payable, 

 

 

 

 

 

 

 

 

 

 

 

 

       net of debt discount of $163,447 and $111,465

 

 

4,210,087

 

 

 

4,129,520

 

 

 

 

 

    Promissory notes payable

 

 

230,000

 

 

 

230,000

 

 

 

 

 

    Deferred revenue

 

 

-

 

 

 

21,500

 

 

 

 

 

    Derivative liability

 

 

118,352

 

 

 

118,400

 

 

 

 

 

      Total current liabilities

 

 

8,453,652

 

 

 

8,186,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Global Arena Holdings, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

   Preferred stock, $0.001 par value; 2,000,000 shares   

     authorized;

 

 

 

 

 

 

 

 

 

 

 

 

      Series B preferred stock; 250,000 shares authorized

 

 

 

 

 

 

 

 

 

 

 

 

      49,202 and 49,202 issued and outstanding

 

 

49

 

 

 

49

 

 

 

 

 

   Common stock, $0.001 par value; 2,000,000,000 shares authorized;

 

 

 

 

 

 

 

 

 

 

 

 

      2,091,007,372 and 2,044,502,156 shares issued and outstanding

 

 

2,091,007

 

 

 

2,044,502

 

 

 

 

 

   Additional paid-in capital

 

 

20,059,493

 

 

 

19,951,515

 

 

 

 

 

   Accumulated deficit

 

 

(30,018,164

)

 

 

(29,594,851

)

 

 

 

 

      Total Global Arena Holdings, Inc. stockholders deficit

 

 

(7,867,614

)

 

 

(7,598,785

)

 

 

 

 

Noncontrolling interest

 

 

(23,042

)

 

 

(23,042

)

 

 

 

 

      Total stockholders deficit

 

 

(7,890,656

)

 

 

(7,621,826

)

 

 

 

 

            TOTAL LIABILITIES AND STOCKHOLDERS'

                DEFICIT

 

 

562,996

 

 

 

564,445

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4


 

GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

2022

 

 

2021

 

 

 

 

Revenues:

 

 

 

 

 

 

Services

 

$

197,831

 

 

$

234,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

174,919

 

 

 

117,712

 

 

 

 

Marketing and advertising

 

 

41,194

 

 

 

-

 

 

 

 

Software development

 

 

7,163

 

 

 

3,852

 

 

 

 

Professional fees

 

 

107,980

 

 

 

53,932

 

 

 

 

General and administrative

 

 

72,126

 

 

 

39,948

 

 

 

 

Printing

 

 

20,309

 

 

 

61,634

 

 

 

 

     Total operating expenses

 

 

423,691

 

 

 

277,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(225,860

)

 

 

(42,493

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

Interest expense and financing costs

 

 

(197,503

)

 

 

(170,317

)

 

 

 

Change in fair value of derivative liability

 

 

48

 

 

 

(512,209

)

 

 

 

Gain on settlement of debt

 

 

-

 

 

 

509,080

 

 

 

 

     Total other expenses

 

 

(197,455

)

 

 

(173,446

)

 

 

 

Income (loss) before provision for taxes

 

 

(423,313

)

 

 

(215,939

)

 

 

 

Provision for income taxes

 

 

 

 

 

 

-

 

 

 

 

Net loss

 

 

(423,313

)

 

 

(215,939

)

 

 

 

Net loss attributed to noncontrolling interest

 

 

 

 

 

 

-

 

 

 

 

Net loss attributed to Global Arena Holdings, Inc.

 

$

(423,313

)

 

$

(215,939

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

   - basic and diluted

 

 

2,064,848,188

 

 

 

1,751,440,282

 

 

 

 

Earnings (loss) per share - basic and diluted

 

$

(0.00

)

 

$

(0.00

)

 

 

 

 

 

$

(0.00

)

 

$

( 0.00

)

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

5


 

GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT

 

 

 

Series B Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

 

Total Global Stockholders'

 

 

Noncontrolling

 

 

Total

Stockholders

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

 

Interest

 

 

Deficit

 

 

 

 

 

Balance, December 31, 2021

 

 

49,202

 

 

$

49

 

 

 

2,044,502,156

 

 

$

2,044,502

 

 

$

19,951,515

 

 

$

(29,562,303

)

 

$

(7,566,237

)

 

$

(23,042

)

 

$

(7,589,279

)

Issuance of common stock for convertible debt and accrued interest











46,505,216




46,505




11,627








58,132








58,132


Alolocated value of warrants and beneficial conversion feature related to issuance of convertible note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

96,352

 

 

 

 

 

 

 

96,352

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(423,313

)

 

 

(423,313

)

 

 

 

 

 

 

 

 

Balance, March 31, 2022

 

 

49,202

 

 

$

49

 

 

 

2,091,007,372

 

 

$

2,091,007

 

 

$

20,059,494

 

 

$

(30,018,163

)

 

$

(7,867,614

)

 

$

(23,042

)

 

$

(7,890,656

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

49,202

 

 

$

49

 

 

 

1,712,958,504

 

 

$

1,712,959

 

 

$

19,128,836

 

 

$

(28,684,689

)

 

$

(7,842,845

)

 

$

(23,042

)

 

$

(7,865,887

)

Issuance of common stock for

convertible debt and accrued interest

 

 

 

 

 

 

 

 

 

 

69,746,667

 

 

 

69,746

 

 

 

12,758

 

 

 

 

 

 

 

82,504

 

 

 

 

 

 

 

82,504

 

Fair value of stock options issued for Series B Preferred Stock

 

 

 

 

 

 

 

 

 

 

75,000,000

 

 

 

75,000

 

 

 

412,500

 

 

 

 

 

 

 

487,500

 

 

 

 

 

 

 

487,500

 

Allocated value of warrants and beneficial conversion feature related to

issuance of convertible debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

212,584

 

 

 

 

 

 

 

212,584

 

 

 

 

 

 

 

212,584

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(215,939

)

 

 

(215,939

)

 

 

 

 

 

 

(215,939

)

Balance, March 31, 2021

 

 

49,202

 

 

$

49

 

 

 

1,857,705,171

 

 

$

1,857,705

 

 

$

19,766,678

 

 

$

(28,900,628

)

 

$

(7,276,196

)

 

$

(23,042

)

 

$

(7,299,238

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6


 

GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

 

 

 

2022

 

 

2021

 

 

 

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss)

 

$

(423,313

)

 

$

(215,939

)

 

 

 

Adjustments to reconcile net income (loss) to

 

 

 

 

 

 

 

 

 

 

 

   net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt discount

 

 

69,419

 

 

 

54,347

 

 

 

 

Change in fair value of derivative liability

 

 

(48

)

 

 

512,209

 

 

 

 

Gain on settlement of debt

 

 

-

 

 

 

(509,080

)

 

 

 

Change in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

 

(21,500

)

 

 

(106,095

)

 

 

 

Accounts payable

 

 

(16,434

)

 

 

(13,694

)

 

 

 

Accrued expenses

 

 

232,927

 

 

 

184,663

 

 

 

 

Net cash used in operating activities

 

 

(158,949

)

 

 

(93,589

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Proceeds from convertible promissory notes payable

 

 

171,000

 

 

 

226,500

 

 

 

 

Repayment of convertible promissory notes payable

 

 

(13,500

)

 

 

-

 

 

 

 

Net cash used in financing activities

 

 

157,500

 

 

 

226,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(1,449

)

 

 

132,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING BALANCE

 

 

13,295

 

 

 

57,422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, ENDING BALANCE

 

$

11,846

 

 

$

190,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH PAID FOR:

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

-

 

 

$

-

 

 

 

 

Income taxes

 

 

-

 

 

$

-

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Allocated value of warrants and beneficial conversion features

related to debt

 

$

96,352

 

 

$

212,584

 

 

 

 

Debt converted to common stock

 

$

58,132

 

 

$

82,504

 

 

 

 

Issuance of stock for debt settlement

 

$

-

 

 

$

487,500

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

7


 

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) formed on February 25, 2015, provides comprehensive technology-enabled paper absentee/mail ballot and internet 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 proprietary election software for scanning/tabulation utilizing advanced OMR/OCR/Barcode imaging software featuring de-skewing, de-speckling and image correction.  This system provides three 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 utilizing process occurs offline, eliminating the opportunity for hacking.  GES is also working with multiple vendors and has made investments in companies that are developing Blockchain Technology for a data storage and retrieval registration system, tabulation of paper Absentee/Mail Ballots, and internet voting.
 

On March 25, 2021, the Company entered into a second amended purchase agreement (APA) with Election Services Solutions. Under the second APA the Company entered into an amended asset purchase agreement with Election Services Solutions, LLC.  Under the amended APA, the Company will purchase 100% of the assets of Election Services Solutions, LLC and the Company will pay $650,000, of which $511,150 has already been paid, and issue 40,000,000 common shares to purchase these assets under this second amended APA. This APA replaces the first amended purchase agreement signed on May 10, 2019 wherein the Company was to purchase 100% of the assets of Election Services Solutions, LLC.  The Company was to pay $550,000, of which $511,150 has already been paid, and issue 20,000,000 common shares to purchase these assets under this first amended APA. GES derives over 80 % of its current business from Election Services Solutions. Management anticipates the closing of this transaction will occur in the fourth quarter of 2022.

 

On May 20, 2015, the Company incorporated a new wholly owned entity in the State of Delaware called GAHI Acquisition Corp. This entity was incorporated at the time to be the merger subsidiary for the acquisition of Blockchain Technologies Corp. (BTC) and other software system development.

 

On May 20, 2015, the Company entered into an agreement and plan of merger with BTC. Under this agreement, BTC would have merged with GAHI Acquisition, and GAHI Acquisition, would have been the surviving corporation. As consideration for the merger, the Company was to reserve a number of shares equal to 1/3 the total issued and outstanding of the Company to be issued to BTC shareholders at closing. On October 20, 2015, the parties agreed to extend the closing date of the merger to December 15, 2015. This agreement expired on December 15, 2015.

 

Concurrently, on October 20, 2015, the Company paid $125,000 in cash to BTC and issued to Nikolaos Spanos 1,377,398 of its common shares and 1,993,911 warrants to purchase its common shares at the exercise price of $.10 per common share with an exercise period of three years. The warrants have expired. The common shares and warrants were issued for the purchase of 1,000,000 common shares of BTC. Said common shares of BTC represented ten percent (10%) of the outstanding equity in BTC on October 20, 2015. The securities issued by the Company were



issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933. There has been no further activity in GAHI Acquisition Corp.

 

 

8

 

 

On March 28, 2017, the United States Patent Office issued patents to BTC covering Election Intellectual Property, US Patent #9,608,829, Issued March 28, 2017.  As an equity shareholder in BTC only, GAHC and GES have not used the BTC US Patent. Any use of the patent would require a new negotiation, and new contract with BTC.

 

The Company has determined that the initial investment of Blockchain Technologies Corp. will be written off.  The Companys Board of Directors cancelled all transactions previously proposed but never acted on concerning GAHI Acquisition. GAHI Acquisition will remain a subsidiary for the exclusive use of any future transactions involving Blockchain Technologies Corporation.

 

The Company, GAHI, and GES do not trade crypto currency, nor participate in Initial Coin Offerings.

On June 15, 2019, GES entered into a Term Sheet to create a joint venture with TrueVote, Inc. Under the terms of the agreement GES was to invest $50,000 into True Vote thru a 24 Month Debenture and issue a three year warrant exercisable at $0.01 for 4,500,000 common shares of the Company. The Company will receive 3 million common shares of TrueVote, representing 30% of TrueVote Inc.  On December 16, 2019, this Term Sheet was amended to provide for a December 17, 2019, payment by the Company for $ 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, and the Company will receive 3,000,000 common shares of TrueVote Inc representing Thirty percent (30%) as part of the joint venture between the companies.  Due to the new guidelines issued by the Election Assistance Commission and its Voluntary Voting Guidelines 2.0. The Company is currently renegotiating this transaction and expects to complete the renegotiation by the 3rd quarter 2022..

 

On November 19, 2019, the Company incorporated a new wholly owned entity in the State of Delaware called Tidewater Energy Group Inc. The Board of Directors appointed John S. Matthews and Jason Old as Board members. The Company was formed to explore opportunities in the oil, gas, mineral and energy business.  Tidewater Energy Group Inc. has 40,000,000 common shares authorized, par value $0.001. There are currently 10,000,000 common shares issued and outstanding of which the Company holds 5,100,000 common shares (51%).  The Company invested $50,000 into Tidewater Energy Group Inc. for general capital and administrative expenses in January 2020.

 

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, 2021 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 Companys Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission. The results for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021.

 

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 Companys debt is in



default as of March 31, 2022. These factors raise substantial doubt about the Companys 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.

 

 

9

 

 

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, GAHI Acquisition Corp and Tidewater Energy Group, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Noncontrolling Interest

 

The Company follows ASC Topic 810, Consolidation, which governs the accounting for and reporting of non-controlling interests (NCIs) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parents ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.

 

The net income (loss) attributed to the NCI is separately designated in the accompanying condensed consolidated statements of operations and comprehensive loss.

 

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.

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Options

 

 

15,000,000

 

 

 

-

 

Warrants

 

 

873,793,230

 

 

 

35,854,978

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible notes

 

 

1,562,603,654

 

 

 

1,219,968,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

2,482,063,551

 

 

 

1,255,822,995

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

 

10

 

 

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.

 

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. GESs 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.

 

 

11

 

 

Share-Based Compensation

 

The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based compensation at fair value at the grant date and recognize the expense over the requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

 

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.

 

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 Companys 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.

 

 

12

 

 

The following table presents the Companys assets and liabilities required to be reflected within the fair value hierarchy as of March 31, 2022 and December 31, 2021.

 

 

 

Fair Value

 

 

Fair Value Measurements at

 

 

 

 

 

 

As of 

 

 

March 31, 2022

 

 

 

 

Description

 

March 31, 2022

 

 

Using Fair Value Hierarchy

 

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

 

 

Beneficial conversion feature

 

$

118,352

 

 

$

-

 

 

$

118,352

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

118,352

 

 

$

-

 

 

$

118,352

 

 

$

-

 

 

 

 

 

 

 

Fair Value

 

 

 

Fair Value Measurements at

 

 

 

 

 

As of 

 

 

 

December 31, 2021

 

 

Description

 

 

December 31, 2021

 

 

 

Using Fair Value Hierarchy

 

 

 

 

 

 

 

 

 

Level 1

 

 

 

Level 2

 

 

 

Level 3

 

Beneficial conversion feature

 

$

118,400

 

 

$

-

 

 

$

118,400

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

118,400

 

 

$

-

 

 

$

118,400

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

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 Companys 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 Companys consolidated financial statements.

 

 

13

 

 

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 Companys 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 Companys consolidated financial statements as the Company did not have any lease arrangements that were subject to this new pronouncement.

 

In August 2020, the FASB issued ASU 2020-06DebtDebt with Conversion and Other Options (Subtopic 470-20) and Derivatives and HedgingContracts in Entity's Own Equity (Subtopic 815-40)Accounting for Convertible



Instruments and Contracts in an Entity's Own Equity.  ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract.  ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and HedgingContracts in Entitys Own Equity, and clarify the scope and certain requirements under Subtopic 815-40.  In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entitys own equity.  ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year.  The Company is currently evaluation the impact this ASU will have on its consolidated financial statements.

 

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.

 

NOTE 3 ACQUISITION DEPOSITS

 

On March 25, 2021, the Company entered into a second amended purchase agreement (APA) with Election Services Solutions. Under the second APA the Company entered into an amended asset purchase agreement with Election Services Solutions, LLC.  Under the amended APA, the Company will purchase 100% of the assets of Election Services Solutions, LLC and the Company will pay $650,000, of which $511,150 has already been paid, and issue 40,000,000 common shares to purchase these assets under this second amended APA. This APA replaces the first amended purchase agreement signed on May 10, 2019 wherein the Company was to purchase 100% of the assets of Election Services Solutions, LLC.  The Company was to pay $550,000, of which $511,150 has already been paid, and issue 20,000,000 common shares to purchase these assets under this first amended APA. GES derives over 80 % of its current business from Election Services Solutions. Management anticipates the closing of this transaction will

occur in the fourth quarter of 2022.
 

On June 15, 2019, GES entered into a Term Sheet, and Common Stock Purchase Agreement to create a joint venture with TrueVote, Inc. Under the terms of the agreement GES was to 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 the Company. The Company will receive 3 million common shares of TrueVote, representing 30% of TrueVote Inc. The Company, on December 17, 2019, paid $ 40,000 to True Vote. Under the terms of the agreement GES is to invest an additional $10,000 and the Company issue a 3 year warrant exercisable at $0.01 for 4,500,000 common shares of the Company. On June 1st, 2021, TrueVote issued its White Paper A transparent Electronic Voting System validated by the Bitcoin Blockchain 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.  Due to the new guidelines issued by the Election Assistance Commission and its Voluntary Voting Guidelines 2.0. The Company is currently renegotiating this transaction and expects to complete the renegotiation by the 3rd quarter 2022.

 

 

14

 

 

On November 19, 2019, the Company incorporated a new wholly owned entity in the State of Delaware called Tidewater Energy Group Inc. The Board of Directors appointed John S. Matthews and Jason Old as Board members. The Company was formed to explore opportunities in the oil, gas, mineral, and energy business.  Tidewater Energy Group Inc. has 40,000,000 common shares authorized: par value $0.001. There are currently 10,000,000 common



shares issued and outstanding of which the Company holds 5,100,000 common shares (51%).  The Company invested $50,000 into Tidewater Energy Group Inc. for general capital and administrative expenses in January 2020.

 

NOTE 4 ACCRUED EXPENSES

 

Accrued expenses at March 31, 2021 and December 31, 2020 consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

Accrued interest

 

$

2,425,695

 

 

$

2,305,743

 

Accrued compensation

 

 

1,083,224

 

 

 

978,381

 

 

 

 

 

 

 

 

 

 

Other accrued expenses

 

 

36,438

 

 

 

36,439

 

 

 

 

 

 

 

 

 

 

 

 

$

3,545,357

 

 

$

3,320,563

 

 

 

 

 

 

 

 

 

 

 

NOTE 5 - 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 December 31, 2021, as amended.  The outstanding balance was $230,000 and $230,000 as of March 31, 2022 and December 31, 2021, respectively.

 

 

15

 

 

NOTE 6 - CONVERTIBLE PROMISSORY NOTES PAYABLE

 

Convertible promissory notes payable at March 31, 2022 and December 31, 2021 consist of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Convertible promissory notes with interest rates ranging from 10% to 12% per annum, convertible into common shares at a fixed price ranging from $0.001 to $0.03 per share. Maturity dates through December 2022, as amended. ($1,689,000 in default)

 

$

3,042,250

 

 

$

2,952,250

 

Convertible promissory notes with interest rates ranging from 10% to 12% per annum, convertible into common shares at prices equal to 60% discount from the lowest trade price in the 20-25 trading days prior to conversion (as of December 31, 2020 the conversion price would be $0.001 per share). Maturity dates through December 31, 2022, as amended.

 

 

200,784

 

 

 

200,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible promissory notes with interest at 12% per annum, convertible into common shares of GES. The maturity dates through December 31, 2022, as amended. ($504,500 in default)

 

 

1,130,500

 

 

 

1,093,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total convertible promissory notes payable

 

 

4,373,534

 

 

 

4,246,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortized debt discount

 

 

(163,447

)

 

 

(117,014

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible promissory notes payable, net discount

 

 

4,210087

 

 

 

4,129,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less current portion

 

 

(4,210,087

)

 

 

(4,129,520

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term portion

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A rollforward of the convertible promissory notes payable from December 31, 2021 to March 31, 2022 is below:

 

 

 

 

 

 

 

 

 

 

 

Convertible promissory notes payable, December 31, 2021

 

$

4,129,520

 

Issued for cash

 

 

190,500

 

 

 

 

 

 

Issued for original issue discount

 

 

(19,500

)

 

 

 

 

 

Conversion to common stock

 

 

(50,000)

 

 

 

 

 

 

Issuance of common stock for debt settlement

 

 

-

 

 

 

 

 

 

Debt discount related to new convertible promissory notes

 

 

(96,352

)

 

 

 

 

 

Amortization of debt discounts

 

 

69,419

 

 

 

 

 

 

Convertible promissory notes payable, March 31, 2022

 

$

4,210,087

 

 

 

 

 

 

 

NOTE 7 - DERIVATIVE FINANCIAL INSTRUMENTS

 

Certain of the Companys convertible promissory notes payable are convertible into shares of the Companys 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:

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

Risk-free interest rate

 

 

1.84

%

 

 

0.04

%

Expected life of the options (Years)

 

 

0.01

 

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

Expected volatility

 

 

111

%

 

 

157

%

 

 

 

 

 

 

 

 

 

 

 

Expected dividend yield

 

 

0

%

 

 

0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value

 

$

118,352

 

 

$

118,400

 

 

 

 

 

 

 

 

 

 

 

 

 

A rollfoward of the derivative liability from December 31, 2021 to March 31, 2022 is below:

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities, December 31, 2021

 

$

118,400

 

Change in fair value of derivative liabilities

 

 

(48

)

 

 

 

 

 

Derivative liabilities, March 31, 2022

 

$

118,352

 

 

 

 

 

 

 

NOTE 8 - STOCKHOLDERS DEFICIT

 

Series B Preferred Stock

 

Pursuant to the Companys 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 Stock dividend is cumulative and accruing at the rate of ten percent (10%) per annum. The dividend shall be paid in common stock of the Company at the current market price. No dividend may be paid on common shares so long as the Series B Preferred Stock dividend is outstanding. Each Series B preferred share, valued at $10 per Series B preferred share, shall be convertible into a number of common shares at the previous average of the 5 Trading day closing price as reported by OTC Pink, equal to a value of $11.5. The conversion right is only available when the common shares are trading at above $.006. At any time prior to the second anniversary of issuance, the Company may redeem, in whole or in part, the Series B Preferred Stock at an amount equal to 115% of purchase price on not less than thirty (30) days nor more than sixty (60) days written notice

 

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.  During the year ended December 31, 2020, 10,798 of these preferred shares were converted into 36,519,609 shares of common stock.

 



Common Stock

 

On April 28, 2016, the stockholders approved an amendment to the Companys 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 Companys 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.

 

On October 11, 2019, the Companys shareholders approved an increase of the Companys authorized shares to One Billion (1,000,000,000) common shares. 

 

On September 7, 2021, the stockholders of the Company re-elect the three (3) directors to serve as members of the Board of Directors of the Company to serve for the ensuing three years and or until their successors are duly elected and qualified.  The directors named to our Board are John Matthews, Martin Doane, and Facundo Bacardi;


On September 7, 2021, the stockholders of the Company voted to authorize an increase in the Companys authorized capital stock to 4,000,000,000 (four billion);

 

On September 7, 2021, the stockholders of the Company voted to authorize the Company to effectuate a 1 for 12 reverse split of the outstanding common shares;


 On September 7, 2021, the stockholders of the Company voted to ratify the appointment of Raul Carrega, CPA as the Companys independent registered public accounting firm for the year ending December 31, 2021

 

 

17

 

 

During the three months ended March 31, 2021, the Company issued 69,745,667 shares of common stock for convertible notes of $68,400 and accrued interest of $14,104 and issued 75,000,000 shares of common stock in connection with a note settlement agreement valued at $487,500.  The shares were valued based on the market price on the grant date. 

 

Option Activity

 

A summary of the option activity is presented below:

 

 

 

Number of
Options

 

 

Weighted
Average
Exercise
Price ($)

 

 

Weighted
Average
Remaining
Contractual
Life (in years)

 

 

Aggregate
Intrinsic
Value ($)

 

Outstanding, December 31, 2021

 

 

15,000,000

 

 

 

0.02

 

 

 

1.19

 

 

 

-

 

 

 

Granted

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited/Canceled

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding, March 31, 2022

 

 

15,000,000

 

 

 

0.02

 

 

 

0.69

 

 

 

-

 

 

 

Exercisable, March 31, 2022

 

 

15,000,000

 

 

 

0.02

 

 

 

0.69

 

 

 

-

 

 

 

 

The exercise price for options outstanding at March 31, 2022 is as follows:

 

Outstanding and Exercisable

 

 

 

 

Number of
Options

 

Exercise
Price

 

 

15,000,000

 

$

0.02

 

15,000,000

 

 

 

 

 

Warrant Activity

 

A summary of warrant activity is presented below:

 

 

 

Number of
Warrants

 

 

Weighted
Average
Exercise
Price ($)

 

 

Weighted
Average
Remaining
Contractual
Life (in years)

 

 

Aggregate
Intrinsic
Value ($)

 

Outstanding, December 31, 2021

 

 

539,793,230

 

 

 

0.070

 

 

 

1.40

 

 

 

114,802

 

 

 

Granted

 

 

360,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited/Canceled

 

 

(56,125,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding, March 31, 2022

 

 

873,793,230

 

 

 

0.005

 

 

 

2.83

 

 

 

587,052

 

 

 

Exercisable, March 31, 2022

 

 

873,793,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

 

The exercise price for warrants outstanding at March 31, 2022 is as follows:

 

Outstanding and Exercisable

 

 

 

Number of
Warrants

 

Exercise
Price

 

 

 

 

 

18,500,000

 

$

0.00100

 

111,111

 

 

0.00180

 

76,923,000

 

 

0.00190

 

154,423,000

 

 

0.00200

 

33,333,333

 

 

0.00300

 

25,000,000

 

 

0.00400

 

79,200,000

 

 

0.00500

 

21,308,336

 

 

0.00600

 

7,142,857

 

 

0.00700

 

52,694,593

 

 

0.05000

 

157,000

 

 

0.25000

 

45,000,000

 

 

0.00200

 

360,000,000

 

 

0.00050

 

873,793,230

 

 

 

 

 

During the three months ended March 31, 2022, the Company issued a total of 360,000,000 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 5 years

    Volatility of 111%;

    Dividend yield of 0%;

    Risk free interest rate of 1.84%

 

NOTE 9 - 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 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. On December 14, 2020, parties amended the settlement agreement to state that the Company shall pay the prior attorney Two Hundred Nineteen Thousand, Five Hundred and Seventy-Six Dollars and thirty nine cents ($219,576.39). The amount due shall be paid to the prior attorney in payments of Five Thousand Dollars per month for a period of thirty-four (34) months. On January 27, 2021, the Company made a payment of $5,000, on April 12, 2021, the Company made a payment of $15,000, on August 6, 2021, the Company made a payment of $5,000. On October 1, 2021, the Company made a payment of $ 5,000 and on November 12, 2021, the Company made a payment of $10,000. On January 7, 2022, the Company made a payment of $ 5,000 and on February 18, 2022, the Company made a payment of $5,000.

 

On October 16, 2020, the Companys subsidiary, Tidewater Energy Group Corp. was named as a defendant in a lawsuit filed in District Court in and For Tulsa County, State of Oklahoma, CJ-2020-3172. On January 13, 2021, the plaintiffs added the Company to the lawsuit. The plaintiffs are seeking damages, disgorgement and specific performance relief relating to a Purchase and Sale Agreement to purchase all of the membership interests in Foster Energy. The Company has obtained counsel to dispute the charges.  On March 18, 2021, the Company filed a motion to dismiss and brief in support.  The Company asserted that the plaintiffs claims are entirely without merit as the Company was not a party to the Purchase and Sale Agreement or the related non-disclosure agreement. Tidewater concurrently filed a motion to dismiss based on legal remedies available to Tidewater. The litigation is ongoing.

 

 

19

 

 

NOTE 10 - AGREEMENTS

 

On March 25, 2021, the Company entered into a second amended purchase agreement (APA) with Election Services Solutions. Under the second APA the Company entered into an amended asset purchase agreement with Election Services Solutions, LLC.  Under the amended APA, the Company will purchase 100% of the assets of Election Services Solutions, LLC and the Company will pay $650,000, of which $511,150 has already been paid, and issue 40,000,000 common shares to purchase these assets under this second amended APA. This APA replaces the first amended purchase agreement signed on May 10, 2019, wherein the Company was to purchase 100% of the assets of Election Services Solutions, LLC.  The Company was to pay $550,000, of which $511,150 has already been paid, and issue 20,000,000 common shares to purchase these assets under this first amended APA. GES derives over 80 % of its current business from Election Services Solutions. Management anticipates the closing of this transaction will occur in the fourth quarter of 2022.

 

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 GESs 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, and VP will own 100% of the rights to the software, while GES will be responsible for all administrative and other election procedures. This transaction will close in the 3rd Quarter of 2022.



 

On January 14, 2022, GES entered into an Independent Consulting Agreement (ICA) with Magdiel Rodriquez. Under the terms of the ICA Magdiel Rodriquez will receive 15,000,000 million common shares in return for his software expertise in the development of GES election software. This new ICA replaces an amended MSA signed May 13, 2019 with HCAS and Magdiel Rodriquez wherein the Company was to issue a total of 30,000,000 warrants to purchase the Companys common shares at a price of $0.005 as consideration for the services of HCAS and Mr. Magdiel Rodriquez. Mr. Rodriguez has over 25 years experience in the areas of Information Security, Enterprise Risk Management and Compliance, Information Technology and Operations including 21 years with Visa Inc. where he performed as Senior Business Leader of Information Security. Magdiel has extensive experience in a broad range of areas related to Information Security, Network Engineering, and Enterprise Governance, Risk and Compliance and Payment networks within the financial industry.  Management anticipates the closing of this transaction will occur in the second quarter of 2022.

 

On June 27, 2019, Blockchain Valley Ventures and GES signed an 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, wherein BVV was to serve as an advisor in connection with a Voter Registration, Voter Authentication, and Voter Eligibility using a Blockchain Platform and GES would pay BVV $25,000 CHF payment upon completion of the engagement. This agreement replaced a June 19, 2019 engagement letter with Blockchain Valley Ventures (BVV) of Zug Switzerland. Under the terms of the original agreement, GES was to pay BVV 50,000 Swiss Francs (CHF).

 

GES made payments of $25,000 CHF and received the working paper primarily covering the following matters:
 

 

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.

 

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.

 

Documentation of the results of a) and b) in order to provide the basis of the technical development of the platform.

 

 

 

20

 

 

 

 

 

Development of an implementation recommendation with respect to Voting on the Blockchain Platform.

 

Legal facilitation with respect to outside tax and legal advisors in connection with compliance with local and international regulation.

 

Project Management during the engagement.

 

The Working Paper discusses 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 begin 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. The anticipated development start is in the 1st quarter 2023.

 

1)    GES Investment in TrueVote Inc.

 

On June 15, 2019, GES entered into a Term Sheet, and Common Stock Purchase Agreement to create a joint venture with TrueVote, Inc. Under the terms of the agreement GES was to 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 the Company. The Company will receive 3 million common shares of TrueVote, representing 30% of TrueVote Inc. The Company, on December 17, 2019, paid $ 40,000 to TrueVote. Under the terms of the agreement GES is to invest an additional $10,000 and the Company issue a 3 year warrant exercisable at $0.01 for 4,500,000 common shares of the Company. On June 1st, 2021, TrueVote issued its White Paper A transparent Electronic Voting System validated by the Bitcoin Blockchain



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.  Due to the new guidelines issued by the Election Assistance Commission and its Voluntary Voting Guidelines 2.0, the Company is currently renegotiating this transaction and expects to complete the renegotiation by the 3rd quarter 2022.

 

The TrueVote Voting System will be based on traditional, proven database methodologies and layered with a checksum that is posted on the blockchain, proving all data is immutable and unalterable.

 

TrueVote is directed by Brett Morrison recently the Director of Enterprise Information Systems at SpaceX. Brett was as an e-commerce pioneer, getting brands online and creating a new channel for sales at the beginning of the e-commerce boom. Brett co-founded Onestop Internet in 2003 out of his garage and built the original e-commerce and warehouse management software that started the company. Throughout his time as Chief Technology Officer and Chief Innovation Officer at Onestop, he oversaw and managed its growth and architected and helped build the new Onestop 2.0 platform. Prior to Onestop, Brett co-founded one of the first photo sharing companies on the Internet, ememories.com, which was sold to PhotoWorks, one of the largest photo processing companies in the U.S. True Vote is also directed by Ped Hasid who graduated UCLA with Magna Cum Laude Honors in 2007. Ped later went on to cofound Block26, a venture vehicle for the DLT space established in 2014, leading the technology and investment strategy for the firm. Block26 to date has financed and incubated innovative projects that aim to enhance consumer adoption of DLT technology. 

 

On June 15, 2019, 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 three 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 three 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 TrueVote. The Company will pay an additional $10,000 and a three year warrant exercisable at $0.01 for 4,500,000 common shares of the Company, in the 1st quarter of 2021. Management is currently re-negotiating this contract.

 

 

21

 

 

2)    Tidewater Energy Group Inc.

 

On November 19, 2019, the Company incorporated a new wholly owned entity in the State of Delaware called Tidewater Energy Group Inc. The Board of Directors appointed John S. Matthews and Jason Old as Board members.

 

The Company was formed to explore opportunities in the oil, gas, mineral, and energy business.  Tidewater Energy Group Inc. has 40,000,000 common shares authorized: par value $0.001. There are currently 10,000,000 common shares issued and outstanding of which the Company holds 5,100,000 common shares (51%).  The Company invested $50,000 into Tidewater Energy Group Inc. for general capital and administrative expenses in January 2020.

 

3)    GAHI Acquisition Corp.

 

On June 7, 2019, the Companys second subsidiary, GAHI Acquisition Corp. (GAHI) was authorized by the Companys Board of Directors to infuse an initial deposit of $50,000 into the subsidiary for general capital and administrative expenses. GAHI Acquisition will be repurposed in order to explore potential new business ventures in an effort to increase shareholder value. The Company will cause GAHI Acquisition 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. On November 28, 2019, the Companys Board of Directors authorized the termination of the transaction previously authorized to infuse an initial deposit of $50,000 into GAHI Acquisition for general capital and administrative expenses and have GAHI Acquisition 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 the Company and will focus on Blockchain related companies for investments and acquisition.

 

On January 11, 2022, the Company entered into a 12% annum interest convertible promissory note with an investor for the principal amount of $140,000 with an original issue discount in the amount of $14,000 mature in twelve months. The note can be converted to the Companys common stock at $0.0005 per share. In connection with the issuance of the convertible promissory note, the Company also issued two common stock purchase warrant, the first common stock purchase warrant for a total of 100,000,000 shares of the Companys common stock and the second common stock purchase warrant for a total of 260,000,000 shares of the Companys common stock. The exercise price for both warrants are $0.0005 per share vesting in five years.

 

On February 2, 2022, Global Election Services, Inc. entered into a promissory note with an investor for the amount of $12,000 with original issue discount of $2,000. The note has been repaid in full as of March 31, 2022.

 

On February 3, 2022, Global Election Services, Inc. entered into a promissory note with an investor for the amount of $17,500 with original issue discount of $2,500. The note bears 10% interest and mature in six months.

 

On March 30, 2022, the Company entered into a convertible note with an investor for the amount of $20,000. The note bears a 12% interest and mature in twelve months. The Note can be converted into Global Election Services Inc. common stock at an $8,000,000 valuation.

 

NOTE 11 SUBSEQUENT EVENTS

 

On April 7, 2022, Global Election Services, Inc, entered into a convertible note with an investor for the amount of $12,500. The note bears a OID of $1,500 and matures in 90 days. The Note can be converted into Global Election Services Inc common stock at an $ 8 million dollar valuation.


 

 

22

 

 

On April 7, 2022, Global Election Services, Inc,  entered into a convertible note with an investor for the amount of $12,500. The note bears OID of $1,500 and matures in 90 days. The Note can be converted into Global Election Services Inc common stock at an $ 8 million dollar valuation.



On May 20, 2022, Global Election Services, Inc, entered into a convertible note with an investor for the amount of $26,000. The note bears interest of 12% and matures in 90 days. The Note can be converted into Global Election Services Inc common stock at an $ 8 million dollar valuation.


On April 15, 2022, the Company made a $10,000 final payment for the joint venture with TrueVote, Inc.

 

On March 31, 2022, the Company was named as a defendant in a lawsuit filed in the Supreme Court of the State of New York, Index No. 651531/2002. The plaintiff has alleged breach of their individual employment contract and unjust enrichment. The plaintiff is seeking damages relating to a plaintiffs 2015 prior employment agreement with the Company. The Company has obtained counsel to dispute the charges.

 

 

23

 

 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations


Forward-looking Statements

 

Statements in this Managements Discussion and Analysis of Financial Condition and Results of Operation, as well as in certain other parts of this Quarterly Report on Form 10-Q (as well as information included in oral statements or other written statements made or to be made by the Company) that look forward in time, are forward-looking statements made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, expectations, predictions, and assumptions and other statements that are other than statements of historical facts. Although the Company believes such forward-looking statements are reasonable, it can give no assurance that any forward-looking statements will prove to be correct. Such forward-looking statements are subject to, and are qualified by, known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by those statements. These risks, uncertainties and other factors include, but are not limited to the Companys ability to estimate the impact of competition and of industry consolidation and risks, uncertainties and other factors set forth in the Companys filings with the Securities and Exchange Commission, including without limitation to our Annual Report on Form 10-K.

 

The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q.

 

Current GES Corporate Operations

 

GES has developed and deployed proprietary Registration software, which was designed specifically to authenticate and register voters. This proprietary software functions as a data storage and retrieval registration system by cross-referencing eligibility status within a control voter database. In a mail ballot election, the voters ID barcode, QR code, or signature on the Business Reply Envelope, can be scanned and the status of that voter is identified. If the voter is not eligible to vote or another ballot for that individual has already been registered in the system, that ballot is marked VOID and removed from the count. In an in-person election, the voter provides their name for look-up in the system. If they have not voted, a signature box pops up on the screen, the voter signs an electronic signature pad and the digital signature is captured next to their name. If a voter tries to vote more than once, an alert will pop up indicating that the voter has already registered, and the voter will not receive an additional ballot. Because we account for every single ballot, the system has multiple reporting options, which include the list of valid envelopes and list of voters whose ballot was void, detailing the reason. Once the voter is authenticated, the identifiers are removed to ensure a secret vote and the ballot is scanned for tabulation.

 

GES developed proprietary Scanning and Tabulation election software. This software features advanced OMR/OCR/Barcode scanning and tabulation system featuring de-skewing, de-speckling and image correction. The computer hardware was designed to run without Internet or Wi-Fi access and is hard wired, ensuring complete security. The system allows for triple-auditing capabilities, which are; electronically generated tabulation results, .jpeg imaging and storage, and the original physical ballot. This advancement gives GES the ability to tabulate elections faster and more efficiently. As experts in paper/mail ballot elections, GES began deploying this system in our elections in the third quarter of 2017 and it has been operating flawlessly.

 

In 2020 GES developed, built and implemented a propriety online election voting solution that is compliant with Title IV of the United States Department of Labor Office of Labor-Management Standards.

 

GES built the platform on one of the most secure global infrastructures Amazon Web Services (AWS) which is a comprehensive, evolving platform provided by Amazon that includes a mixture of infrastructure as a service (IaaS) platform as a service and packaged software (PaaS), and software as a service offerings (SaaS).


24



The platform enables GES to protect individual client data, including the ability to encrypt it, move it, and manage



retention (if required). All data flowing across the global network interconnects with the GES secured data center and is automatically encrypted at the physical layer before it leaves our secured facilities. Additional encryption layers exist as well.

 

GES controls where our client data is stored, who can access it, and what resources your organization is utilizing at any given moment. Fine-grain identity and access controls combined with continuous monitoring for near real-time security information ensures that the right resources have the right access at all times, wherever your information is stored.

 

GES encryption software uses AES 256 with a cryptographic key using a RSA elliptic curve of 4096, which is used to encrypt the communication of the client and the GES server, as well all client data hosted in the server. A six-digit security code, delivered to the voters email address provided by the client, must be validated by the prospective voter in order to authenticate the identity of the voter before the voter may access the ballot. After validating the voter, the voter then votes anonymously, so that the identity of the voter and the ballot cast can never be matched.

 

The GES voting platform verifies that the users does not use the back and forward browser button, a safe mechanism against tampering. Distributed denial of service DDoS protection tools help secure websites and applications and prevent DDoS attacks, which bombard websites with traffic traditionally delivered via botnets" that are created by networked endpoints connected via malware. The DDoS software protection provides always-on detection and automatic inline mitigations that minimize application downtime and latency.

 

Management believes there is a unique opportunity in conducting United States and Foreign Government Elections. GES senior Management teams primary business for 40 years has been mail/absentee ballot elections. The market for GES conducting paper/mail ballot elections grew exponentially in January of 2017, when first President Barack Obama, and then President Donald Trump designated U.S. Elections Critical Infrastructure. The effect of these Executive Orders was to refocus the Department of Homeland Security, and the Elections Assistance Commission to reenergize compliance on U.S. Government elections, and assist by making available resources such as intelligence, funding, training and best practices in election software and hardware, for all 50 States.

 

On March 23, 2018, President Trump signed the Consolidated Appropriations Act of 2018 into law, which included $380 million in Help America Vote Act (HAVA) grants for states to make election security improvements. Among the authorized uses of the grant funds is the replacement of voting equipment, specifically equipment that does not produce a paper record or that is determined to be at the end of its useful life. Recent published examples are:

 

 

On December 20, 2019, President Trump signed the Consolidated Appropriations Act of 2020 into law. The Act includes $425 million in new HAVA funds made available.

 

In 2019, Hawaii (SB 166) allocated $789,598 for the purpose of a vote counting system contract.

 

In 2019, Georgia issued a $150 million bond package for the replacement of voting equipment statewide. The state also appropriated $12,840,000 from the General Fund for the purpose of financing projects and facilities for the Office of Secretary of State. 

 

In 2019, Wyoming appropriated $7.5 million into an election readiness account (HB 21). The state's $3 million HAVA allocation will also be placed in this account, the majority of which will go toward replacing outdated voting equipment statewide. 

 

In 2019, North Dakota enacted SB 2002, which included a one-time appropriation for voting equipment and electronic poll books statewide. The total amount of $11.2 million included $8.2 million in state funds and $3 million in HAVA funds. 


The opportunity for mail/absentee ballots became a page one story in 2020 due to the Coronavirus Pandemic. Subsequent accusations of voter fraud, compounded by President Trump declaring the 2020 U.S. election voting as rigged and fraudulent, has led to almost 40% of the U.S. Electorate believing the 2020 election was fraudulent.


25






On October 23, 2019, the Brennan Center has estimated that the national cost for some of the most critical election security measures to be approximately $ 2.2 Billion dollars over the next five years.

 

Every state has a vote by mail process right now. Voters may request an Absentee Mail Ballot from their County Board of Elections or a Vote by Mail ballot is sent. In either case, our proprietary registration and tabulation software has an immediate need. In the 2016 U.S. Presidential election, approximately thirty three million (33 ,000,000) ballots were cast by mail making up about 25% of the votes. Most individuals think only of the Presidential election every four years as the Election. In reality, municipal Board of Elections throughout the U.S. are conducting elections annually for such elected positions as; Governor, Mayor, City Council, State Assembly, State Senate, Members of U.S. Congress (House every two years, Senate every six years) Civil and Criminal Justices, Sheriffs, School Boards, Village Trustees, etc. In short, most State and local municipal Board of Elections are in the market purchasing software and hardware every year.

 

In the U.S. there are 3,007 counties, 64 parishes, 19 organized boroughs, 11 census areas, 41 independent cities, and the District of Columbia, all of whom must buy updated Election Machines and Software. Each municipal county individually purchases election voting machines under the guidance of their own States Secretary of State.

 

The United States Government, through the Elections Assistance Commission, certifies election software and hardware for use in U.S. Government Elections. On February 10, 2021, the U.S. Election Assistance Commission (EAC) announced the adoption of the Voluntary Voting System Guidelines (VVSG) 2.0. These guidelines have been formulated to improve cyber security, accessibility and usability requirements in the U.S. voting process.

 

Election Software Developers and Manufactures may also qualify by meeting individual requirements for individual States in the United States.

 

GES has begun undertaking the following six step benchmarks to qualify for the updated U.S. certification and is also considering individual State certifications;

 

Step 1 - Voting System Testing, Testing current developed systems to U.S. Federal 2.0 Standards

Step 2 - Technical Data Package Review; Reviews submitted documents against documentation requirements of outside agencies, published standards, or U.S. specifications

Step 3 - Physical Configuration Audit; Examines the documentation of the system against the actual submitted system

Step 4 - System Integration Testing; Executes tests on all components of a system configured as if the system was deployed

Step 5 - Functional Configuration Audit; Examines submitted test data and conducts additional testing to verify submitted system hardware and software described in the documents submitted to the Elections Assistance Commission and the Department of Homeland Security

Step 6 - Security Testing; Performs vulnerability assessments and penetration analysis to assess system vulnerabilities

 

Trends and Uncertainties

 

The Company currently has minimal revenues and operations and is investigating potential businesses and companies for acquisition to create and/or acquire a sustainable business. Our ability to acquire or create a sustainable business may be adversely affected by our current financial conditions, availability of capital and/ or loans, general economic conditions which can be cyclical in nature along with prolonged recessionary periods, and other economic and political situations.


26



The Company has generated recurring losses and cash flow deficits from its operations since inception and has had to continually borrow to continue operations. These matters raise substantial doubt about the Companys 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 generate positive cash flows from operations. As further described in Liquidity and Capital Resources, management believes that it will be successful in obtaining additional



financing, from which the proceeds will be primarily used to execute its new operating plans. The Company plans to use its available cash and new financing to develop and execute its new business plan and hopefully create and maintain a self-sustaining business. However, the Company can give no assurances that it will be successful in achieving its plans or if financing will be available or, if available, on terms acceptable to the Company, or at all. Should the Company not be successful in obtaining the necessary financing to fund its operations, and ultimately achieve adequate profitability and cash flows from operations, the Company would need to curtail certain or all of its operating activities.

 

There are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. There are no significant elements of income or loss that do not arise from our continuing operations except for the fair value change on derivative financial instruments and settlement on arbitration.

 

The rapid advances in computing and telecommunications technology over the past several decades have brought with them increasingly sophisticated methods of delivering administrating elections. Along with these advances, though, have come risks regarding the integrity and privacy of data, and these risks apply to election companies, falling into the general classification of cybersecurity. While it is not possible for anyone to give an absolute guarantee that data will not be compromised, when applicable, the Company shall utilize third-party service providers to secure the Companys financial and personal data; the Company believes that third-party service providers provide reasonable assurance that the financial and personal data that they hold are secure.

 

Liquidity and Capital Resources

 

As of March 31, 2022, the Company has an accumulated deficit of $30,018,164 and a working capital deficit of $8,499,937. Our ability to continue as a going concern depends upon whether we can ultimately attain profitable operations, generate sufficient cash flow to meet our obligations, and obtain additional financing as needed.

 

For the three months ended March 31, 2022, the Company recorded net loss of $423,313. We recorded an amortization of debt discount of $69,419, a change in fair value of derivative liability of $48. had an decrease in accounts payable of $16,434 and increase in accrued expenses of $232,927 and a decrease in deferred revenue of $21,500. As a result, we had net cash used in operating activities of $(158,949) for the three months ended March 31, 2022.

 

For the three months ended March 31, 2022, we received $171,000 as proceeds from the issuance of convertible promissory notes payable and repaid $13,500 of outstanding convertible note resulting in net cash provided by financing activities of $157,500.

 

As of March 31, 2021, the Company has an accumulated deficit of $28,900,628 and a working capital deficit of $7,850,388. Our ability to continue as a going concern depends upon whether we can ultimately attain profitable operations, generate sufficient cash flow to meet our obligations, and obtain additional financing as needed.

 

For the three months ended March 31, 2021, the Company recorded a net loss of $509,080. We recorded an amortization of debt discount of $54,347. We recorded a gain from the change in fair value of derivative liability of $509,080. We had an increase in accounts payable and accrued expenses of $170,969 and a increase in deferred revenue of $106,095. As a result, we had net cash used in operating activities of $(93,589) for the three months ended March 31, 2021.

 

For the three months ended March 31, 2021, we received $226,500 as proceeds from the issuance of convertible promissory notes payable resulting in net cash provided by financing activities of $226,500.


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Management believes that it will be able to continue its operations and further advance its acquisition plans. However, management cannot give assurances that such plans will materialize and be successful in the near term or on terms advantageous to the Company, or at all. Should the Company not be successful in its new business plans or obtain additional financing, the Company would need to curtail certain or all of its operating activities.



 

The Companys continuation as a going concern is dependent upon its ability to ultimately attain profitable operations, generate sufficient cash flow to meet its obligations, and obtain additional financing as may be required. Our auditors for the years ended December 31, 2021 and 2020 have included a going concern modification in their auditors reports. A going concern modification may make it more difficult for us to raise funds when needed. The outcome of this uncertainty cannot presently be determined.

 

The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will actually improve our operating results.

 

Results of Operations for the Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

 

Revenues for the three months ended March 31, 2022 were $197,831 compared to $234,585 for the three months ended March 31, 2021, a decrease of $36,754. The majority of our clients hold elections on a three year cycle. This decrease in revenues is due primarily to less elections held during the three month period in 2022.

 

Salaries and benefits totaled $174,919 for the three months ended March 31, 2022 compared to $117,713 for the three months ended March 31, 2021. This increase was due to the employment compensation increase by 10% every year for John Matthew and Kathryn Weisbeck.

 

Professional fees for the three months ended March 31, 2022 totaled $107,980 compared to $53,932 for the three months ended March 31, 2021, an increase of $54,048. This increase is primarily due to higher accounting and audit fees during the three months ended March 31, 2022.

 

For the three months ended March 31, 2022, we incurred marketing and advertising expenses of $41,194 compared to the $0 in the three months ended March 31, 2021. We incurred software development expenses of $7,163 in 2022 compared to $3,852 in 2021, we incurred printing costs of $20,309 in 2022 compared to $61,634 in 2021, and we incurred general and administrative expenses of $72,126 in 2022 compared to $39,948 in 2021. The overall increase was due to payroll and professional expense.

 

Total operating expenses for the three months ended March 31, 2022 were $423,689 compared to $277,078 for the three months ended March 31, 2021, an increase of $146,611 principally due to reasons discussed above.

 

Critical Accounting Policies

 

The Companys financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by management's applications of accounting policies. Critical accounting policies for the Company include revenue recognition, valuation of convertible promissory notes and related warrants, stock and stock option compensation, estimates, and derivative financial instruments.

 

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, GAHI Acquisition Corp and Tidewater Energy Group, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.


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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. GESs 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.

 

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. 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.

 

Share-Based Compensation

 

The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

 

Recent Accounting Pronouncements


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In August 2020, the FASB issued ASU 2020-06DebtDebt with Conversion and Other Options (Subtopic 470-20) and Derivatives and HedgingContracts in Entity's Own Equity (Subtopic 815-40)Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and HedgingContracts in Entitys Own Equity, and clarify



the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entitys own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluation the impact this ASU will have on its consolidated financial statements.

 

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.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk


Not Applicable

 

Item 4. Controls and Procedures


Evaluation of Disclosure Controls and Procedures


Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of March 31, 2021.

 

We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Based on this evaluation, our chief executive officer and chief financial officer have concluded such controls and procedures to be not effective as of March 31, 2021 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Evaluation of Changes in Internal Control over Financial Reporting

 

Our chief executive officer and chief financial officer have evaluated changes in our internal controls over financial reporting that occurred during the three months ended March 31, 2021. Based on that evaluation, our chief executive officer and chief financial officer, or those persons performing similar functions, did not identify any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


30



Important Considerations

 

The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the



likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time.

 

Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.


31


 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

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 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. On December 14, 2020, parties amended the settlement agreement to state that the Company shall pay the prior attorney Two Hundred Nineteen Thousand, Five Hundred and Seventy Six Dollars and thirty nine cents ($219,576.39). The amount due shall be paid to the prior attorney in payments of Five Thousand Dollars per month for a period of thirty four (34) months. On January 27, 2020, the Company made a payment of $ 5000.00 and subsequently on April 12, 2020 the Company made a payment of $ 15,000.

 

On October 16, 2020, the Companys subsidiary, Tidewater Energy Group Corp. was named as a defendant in a lawsuit filed in District Court in and For Tulsa County, State of Oklahoma, CJ-2020-3172. On January 13, 2021 the plaintiffs added the Company to the lawsuit. The plaintiffs are seeking damages, disgorgement and specific performance relief relating to a Purchase and Sale Agreement to purchase all of the membership interests in Foster Energy. The Company has obtained counsel to dispute the charges. On March 18, 2021, the Company filed a motion to dismiss and brief in support. The Company asserted that the plaintiffs claims are entirely without merit as the Company was not a party to the Purchase and Sale Agreement or the related non-disclosure agreement. Tidewater concurrently filed a motion to dismiss based on legal remedies available to Tidewater.

 

On March 31, 2022, the Company was named as a defendant in a lawsuit filed in the Supreme Court of the State of New York, Index No. 651531/2002. The plaintiff has alleged breach of contract and unjust enrichment. The plaintiff is seeking damages relating to a plaintiffs prior employment agreement with the Company. The Company has obtained counsel to dispute the charges.

 

 

Item 1A. Risk Factors

 

Not Applicable
 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the three months ended March 31, 2021, the Company issued 69,745,667 shares of common stock for convertible notes of $68,400 and accrued interest of $14,104 and issued 75,000,000 shares of common stock in connection with a note settlement agreement.

 

The above shares were issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.
 



Item 3. Defaults Upon Senior Securities

 

Not Applicable


32


 

Item 4. Mine Safety Disclosures


Not Applicable.
 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

The following is a complete list of exhibits filed as part of the Quarterly Report on Form 10-Q, some of which are incorporated herein by reference from the reports, registration statements and other filings of the issuer with the Securities and Exchange Commission, as referenced below:

 

Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS - XBRL Instance Document

101.SCH - XBRL Taxonomy Extension Schema Document

101.CAL - XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF - XBRL Taxonomy Extension Definition Linkbase Document

101.LAB - XBRL Taxonomy Extension Label Linkbase Document

101.PRE - XBRL Taxonomy Extension Presentation Linkbase Document

 

*Filed Herewith

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

GLOBAL ARENA HOLDING, INC.

    a Nevada corporation

 

 

Date: May __, 2022

By:

/s/ JOHN MATTHEWS

 

 

 

John Matthews

 

 

 

Chief Executive Officer

Chief Financial Officer

 


33


 




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