UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

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FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2012

or

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION FROM ______ TO ______.

 

Commission File Number: 0-54557

 

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GLOBAL EQUITY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		27-3986073
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
Al Habtoor Business Tower Level 28, P.O. Box 29805 Dubai Marina, Dubai, UAE
(Address of principal executive offices)		(Zip code)

 

Registrant’s telephone number: +971 (7) 204 7593

 

23 Frond “K” Palm, Jumeirah, Dubai UAE

(Former Address)

 

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 [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] 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 [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]

 

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

Yes [  ] No [X]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [  ] No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of August 10, 2012, there were 29,245,700 outstanding shares of the Registrant’s Common Stock, $.001 par value. 

 

 

INDEX

 

		Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.		F-1
Notes to Financial Statements (Unaudited)		F-5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		5
Item 3. Quantitative and Qualitative Disclosures about Market Risk		10
Item 4. Controls and Procedures		20
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.		11
Item 1A. Risk Factors		11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		11
Item 3. Defaults Upon Senior Securities		12
Item 4. Mine Safety Disclosure		12
Item 5. Other Information.		12
Item 6. Exhibits		12
SIGNATURES		13

 

 

CONTENTS

 

	Page(s)
Consolidated Balance Sheets as of June 30, 2012 (unaudited) and December 31, 2011	F-1
Consolidated Statements of Operations and Comprehensive Loss Six Months Ended June 30, 2012 and June 30, 2011 (unaudited)	F-2
Consolidated Statement of Stockholders’ Equity Six Months Ended June 30, 2012 (unaudited) and the Years Ended December 31, 2011 and 2010	F-3
Consolidated Statements of Cash Flows Six Months Ended June 30, 2012 and June 30, 2011 (unaudited)	F-4
Notes to Consolidated Financial Statements (unaudited)	F-5 - F-17

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements. 

 

Global Equity International, Inc. and Subsidiary

Consolidated Balance Sheets

 

		June 30, 2012				December 31, 2011
		Unaudited
Assets
Current Assets
Cash		$	105,758			$	2,218
Accounts receivable - net of allowance for doubtful accounts of $35,000 and $0, respectively			142,510				35,000
Prepaids			551				551
Total Current Assets			248,819				37,769
Marketable Securities			1,210,000				1,690,000
Total Assets		$	1,458,819			$	1,727,769
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity
Current Liabilities
Accounts payable		$	30,646			$	37,191
Accounts payable - related parties			312,505				145,528
Loans payable - related party			26,974				40,173
Notes payable - net			37,656				-
Total Current Liabilities			407,781				222,892
Redeemable Series A, Convertible Preferred Stock: 5,000,000 shares authorized and 5,000,000 and no shares issued and outstanding, respectively, $0.001 par value (redemption amount $480,000) (liquidation preference of $0)			480,000				480,000
Common Stock: 70,000,000 shares authorized; 29,245,700 issued and outstanding and 28,780,700 shares issued and outstanding, respectively, $0.001 par value			29,246				28,781
Additional paid in capital			632,106				393,103
Accumulated deficit			(165,314	)			(12,007	)
Other comprehensive income			75,000				615,000
Total Stockholders’ Equity			571,038				1,024,877
Total Liabilities, Redeemable Preferred Stock & Stockholders’ Equity		$	1,458,819			$	1,727,769

 

 

Global Equity International, Inc. and Subsidiary

Consolidated Statements of Operations and Comprehensive Income (Loss)

Three and Six Months ended June 30 2012 & June 30 2011 (Unaudited)

 

 

		Three Months Ended				Three Months Ended				Six Months Ended				Six Months Ended
		June 30, 2012				June 30, 2011				June 30, 2012				June 30, 2011
Revenue		$	285,000			$	-			$	392,500			$	22,581
General and administrative expenses			244,286				97,328				471,259				139,842
Income (loss) from operations			40,714				(97,328	)			(78,759	)			(117,261	)
Interest expense			(54,445	)			-				(74,524	)			-
Net loss		$	(13,731	)		$	(97,328	)		$	(153,283	)		$	(117,261	)
Weighted average number of common shares outstanding - basic and diluted			29,035,315				28,721,423				28,924,931				28,694,859
Net loss per common share - basic and diluted			(0.00	)			(0.00	)			(0.01	)			(0.00	)
Comprehensive Loss:
Net loss		$	(13,731	)		$	(97,328	)		$	(153,283	)		$	(117,261	)
Unrealized loss on available for sale marketable securities			(75,000	)			(1,079,240	)			(540,000	)			(608,330	)
Comprehensive Loss		$	(88,731	)		$	(1,176,568	)		$	(693,283	)		$	(725,591	)

 

 

  

Global Equity International, Inc. and Subsidiary

Consolidated Statement of Stockholders’ Equity

Six months ended June 30, 2012 and the Years Ended December 31, 2011 and 2010

(Unaudited)

 

														Retained Earnings				Accumulated Other				Total
		Common Stock								Additional				(Accumulated				Comprehensive				Stockholders’
		Shares				Amount				Paid-in Capital				Deficit)				Income (Loss)				Equity
Balance - December 31, 2010			28,668,000			$	28,668			$	336,866			$	1,676,095			$	166,076			$	2,207,705
Stock issued for cash ($0.50/share)			103,100				103				51,447				-				-				51,550
Common stock issued for services ($0.50/share)			9,600				10				4,790				-				-				4,800
Net loss - 2011			-				-				-				(1,688,102	)			-				(1,688,102	)
Unrealized gain on available for sale marketable securities			-				-				-				-				448,924				448,924
Balance - December 31, 2011			28,780,700				28,781				393,103				(12,007	)			615,000				1,024,877
Issuance of warrants for interest on notes payable			-				-				6,968				-				-				6,968
Common Stock Issued for cash ($0.50/share)			280,000				280				139,720				-				-				140,000
Issuance of common stock as debt discount on notes payable ($0.50/share)			140,000				140				69,860				-				-				70,000
Common stock issued for services ($0.50/share)			45,000				45				22,455				-				-				22,500
Net loss - 2012			-				-				-				(153,283	)			-				(153,283	)
Unrealized loss on available for sale marketable securities			-				-				-				-				(540,000	)			(540,000	)
Comprehensive Gain / (Loss) - Exchange Rates			-				-				-				(24	)			-				(24	)
Balance - June, 2012			29,245,700			$	29,246			$	632,106				(165,314	)		$	75,000			$	571,038

    

Global Equity International Inc. And Subsidiary

Consolidated Statements of Cash Flows

Six months ended June 30 2012 and June 30 2011 (Unaudited)

 

		Six Months Ended
		June 30 2012				June 20 2011
Cash Flows from Operating Activities
Net Loss		$	(153,283	)		$	(117,261	)
Adjustments to reconcile net loss to net cash used in operating activities
Bad debt			35,000				-
Common stock issued to settle accrued salary - related party			12,500				-
Stock issued for services			10,000				-
Consulting revenues received in marketable securities			(60,000	)			-
Issuance of warrants in connection with debt financing			6,968				-
Amortization of debt discount			67,556				-
Changes in Operating Assets and Liabilities:
Accounts receivable			(142,510	)			-
Accounts payable			(6,545	)			24,691
Accounts payable - related parties			166,977				-
Net Cash Used In Operating Activities:			(63,337	)			(92,570	)
Cash Flows from Financing Activities:
Proceeds from loans  - shareholders			5,701				40,173
Proceeds from convertible debt			-				-
Repayments of loans - shareholders			(18,900	)			-
Proceeds from note			70,100				-
Repayments of note			(30,000	)			-
Proceeds from issuance of common stock			140,000				51,550
Net Cash Provided by Financing Activities			166,901				91,723
Net increase (decrease) in cash			103,564				(847	)
Effect of Exchange Rates on Cash			(24	)			-
Cash at Beginning of Period			2,218				3,275
Cash at End of Period		$	105,758			$	2,428
Supplemental disclosure of cash flow information:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-
Supplemental disclosure of non-cash investing and financing activities:
Debt discount recorded on notes payable		$	70,000			$	-

  

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

Note 1 Basis of Presentation

 

The accompanying unaudited consolidated interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

 

Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations and comprehensive loss, or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

 

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the years ended December 31, 2011 and 2010. The interim results for the period ended June 30, 2012 are not necessarily indicative of results for the full fiscal year.

 

Note 2 Nature of Operations

 

Global Equity Partners, PLC (“GEP”), a private company, was organized under the laws of the Republic of Seychelles on September 2, 2009. Global Equity International Inc. (the “Company” or “GEI”), was organized under the laws of the state of Nevada on October 1, 2010. On November 15, 2010, GEP executed a reverse recapitalization with GEI.

 

Revenue is generated from business consulting services, introduction fees, and equity participation.

 

Note 3 Summary of Significant Accounting Policies

 

Principles of Consolidation

 

All significant inter-company accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period.

 

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non confirming events. Accordingly, the actual results could differ from those estimates.

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

Risks and Uncertainties

 

The Company’s operations are subject to significant risk and uncertainties including financial, operational, competition and potential risk of business failure. The risk of social and governmental factors is also a concern since the Company is headquartered in Dubai.

 

Cash

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At June 30, 2012 and December 31, 2011, respectively, the Company had no cash equivalents.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

The Company recognizes accounts receivable in connection with the services provided. The Company recognizes an allowance for doubtful accounts based on an analysis of current receivables aging and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. 

 

Marketable Securities

 

(A)

Classification of Securities

 

At the time of acquisition, a security is designated as held-to-maturity, available-for-sale or trading, which depends on ability and intent to hold such security to maturity. Securities classified as trading and available-for-sale are reported at fair value, while securities classified as held-to-maturity are reported at amortized cost.

 

All securities held at June 30, 2012 and December 31, 2011 are designated as available for sale. Management does not intend to liquidate these securities in the near term and has classified these securities as non-current. Any unrealized gains and losses are reported as other comprehensive income (loss). Realized gains (losses) will be computed on a specific identification basis and will be recorded in net capital gains (losses) on investments in the statements of operations.

 

Cost Method Investment

 

At June 30, 2012, the Company has one investment, having a fair value of $160,000 that is treated as a cost method investment. The value of the cost method investment pertains to the receipt of 10% of the common stock in a private company in which the best evidence of fair value was the services rendered.

 

The Company recognizes an investment in the stock of an investee as an asset, as a component of marketable securities. Under the cost method of accounting for investments in common stock, dividends will be the basis for recognition by the Company of earnings from the investment. The net accumulated earnings of an investee subsequent to the date of investment are recognized by the Company only to the extent distributed by the investee as dividends. Dividends received in excess of earnings subsequent to the date of investment are considered a return of investment and are recorded as reductions of cost of the investment. At June 30, 2012, the Company had not received any dividends.

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

It is not practicable to estimate the fair value of the investment since the cost of obtaining an independent valuation appears excessive considering the materiality of the investment to the Company. Additionally, there are no identifiable events or changes in circumstances that had a significant adverse effect on the fair value of this investment.

 

(B)

Other than Temporary Impairment

 

The Company reviews its equity investment portfolio for any unrealized losses that would be deemed other-than-temporary and require the recognition of an impairment loss in income. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and the Company’s intent and ability to hold the investments. Management also considers the type of security, related-industry and sector performance, as well as published investment ratings and analyst reports, to evaluate its portfolio. Once a decline in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, the Company may incur future impairments.

 

Beneficial Conversion Feature

 

For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.

 

When the Company records a BCF, the relative fair value of the BCF would be recorded as a debt discount against the face amount of the respective debt instrument. The discount would be amortized to interest expense over the life of the debt.

 

Derivative Liabilities

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

Once the derivative liabilities are determined, they are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes pricing model.

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

Debt Issue Costs and Debt Discount

 

The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of debt, convertible debt and also warrants. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

Original Issue Discount

 

For certain convertible debt issued, the Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.

 

Revenue Recognition

 

Revenue is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability of the related fee is reasonably assured.

 

The Company’s services do not include a provision for cancellation, termination, or refunds.

 

For the six months ended June 30, 2012 and 2011, the Company received marketable securities and cash as consideration for services rendered.

 

At June 30, 2012 and December 31, 2011, the Company had the following concentrations of accounts receivables with customers:

 

Customer		June 30, 2012				December 31, 2011
C			5	%			-	%
D			-	%			43	%
E			-	%			57	%
G			42	%			-	%
H			53	%			-	%

 

For the six months ended June 30, 2012 and 2011, the Company had the following concentrations of revenues with customers:

 

Customer		June 30, 2012				June 30, 2011
C			11	%			100	%
E			5	%			-	%
F*			15	%			-	%
G			31	%			-	%
H			38	%			-	%

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

No securities were acquired from customers “C”, “E”, “G” & “H” as all of this revenue was received in cash.

 

*Non-marketable securities, accounted for under the cost method.

 

Share-based payments

 

The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants at their fair value on the grant date, which is based on the estimated number of awards that are ultimately expected to vest.

 

Share based payments, excluding restricted stock, are valued using a Black-Scholes pricing model. Share based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service.

When computing fair value, the Company considered the following variables:

 

●

The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the share based payment in effect at the time of the grant.

●

The expected term was developed by management estimate.

●

The Company has not paid any dividends on common stock since inception and does not anticipate paying dividends on its common stock in the near future.

●

The expected volatility is based on management estimates regarding private company stock, where future trading of stock in a public market is expected to be highly volatile.

●

The forfeiture rate is based on historical experience.

 

Earnings per Share

 

Basic earnings (loss) per share are computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

 

The Company has no common stock equivalents, which, if exercisable, would be anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.

 

The number of warrants for the purchase of common stock were excluded from the computation of net loss per share for the three and six months ended June 30 2012 were 20,000 and 20,000 respectively.

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

Comprehensive Income (Loss)

 

The comprehensive income or loss consists of the change in unrealized gain (loss) on available-for-sale marketable securities.

 

Fair Value of Financial Assets and Liabilities

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:

 

●

Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

●

Level 2: Inputs reflect: quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

●

Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

The carrying amounts reported in the balance sheet for cash, accounts receivable, prepaid, accounts payable, accounts payable – related parties, loans payable – related party and notes payable, approximate fair value based on the short-term nature of these instruments.

 

The Company has assets measured at fair market value on a recurring basis. Consequently, the Company had gains and losses reported in the statement of comprehensive loss, that were attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at June 30, 2012.

 

The following is the Company’s assets measured at fair value on a recurring and nonrecurring basis at June 30, 2012 and December 31, 2011, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

 

		June 30, 2012				December 31, 2011
Level 1 – None		$	-			$	-
Level 2 – Marketable Securities			1,050,000				1,590,000
Level 3 – Non-Marketable Securities			160,000				100,000
Total		$	1,210,000			$	1,690,000

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value:

 

Marketable Securities — The Level 2 position consists of the Company’s investment in equity securities of stock held in a publicly traded company. The valuation of these securities is based on significant inputs that are observable or can be derived from or corroborated by observable market data. These valuations are typically based on quoted prices in active markets.

 

Non-Marketable Securities at Fair Value on a Nonrecurring Basis — certain assets are measured at fair value on a nonrecurring basis. The level 3 position consist of investments accounted for under the cost method. The Level 3 position consists of investment in an equity security held in a private company.

 

Changes in Level 3 assets measured at fair value for the three months ended June 30, 2012 and the year ending December 31, 2011 were as follows:

 

Beginning balance, December 31, 2010		$	-
Realized and unrealized gains (losses)			-
Purchases, sales and settlements			100,000
Impairment loss			-
Balance, December 31, 2011		$	100,000
Realized and unrealized gains (losses)			-
Purchases, sales and settlements			60,000
Impairment loss			-
Balance, June 30, 2012		$	160,000

 

Recently Adopted Accounting Pronouncements

 

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The guidance in ASU 2011-05 applies to both annual and interim financial statements and eliminates the option for reporting entities to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. This ASU also requires consecutive presentation of the statement of net income and other comprehensive income. Finally, this ASU requires an entity to present reclassification adjustments on the face of the financial statements from other comprehensive income to net income. The amendments in this ASU should be applied retrospectively and are effective for fiscal year, and interim periods within those years, beginning after December 15, 2011. The Company has adopted this guidance in these financial statements.

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The guidance in ASU 2011-04 changes the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements, including clarification of the FASB’s intent about the application of existing fair value and disclosure requirements and changing a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this ASU should be applied prospectively and are effective for interim and annual periods beginning after December 15, 2011. Early adoption by public entities is not permitted. The Company has adopted this guidance in these financial statements.

 

Recent Accounting Pronouncements

 

There are no other new accounting pronouncements that have any impact on the Company’s financial statements.

 

Note 4 Marketable Securities and Fair Value

 

The following table represents the Company’s available for sale marketable securities holdings as of June 30, 2012:

 

Equity securities acquired in 2010		$	2,061,160
Unrealized gains – 2010			210,000
Unrealized losses – 2010			(43,924	)
Equity securities at fair value - 2010			2,227,236
Equity securities acquired in 2011 (services provided)			100,000
Unrealized gains - 2011			405,000
Impairment loss – 2011			(1,042,236	)
Equity securities at fair value – December 31, 2011			1,690,000
Equity securities acquired in 2012 (services provided)			60,000
Unrealized losses during the six months ended June 30, 2012			(540,000	)
Equity securities at fair value – June 30, 2012		$	1,210,000

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

Note 5 Debt

 

(A)

Related Party

 

The Company received loans from the Chief Executive Officer. The loans are non-interest bearing, unsecured and due on demand.

 

The following table represents the loans payable activity as of June 30, 2012:

 

Loans payable – related party - December 31, 2010		$	-
Proceeds - 2011			40,173
Loans payable – related party – December 31, 2011			40,173
Proceeds - 2012			5,701
Repayments - 2012			(18,900	)
Loans payable – related party – June 30, 2012		$	26,974

 

(B) Notes Payable

 

In February and March 2012, the Company entered into two 90 day bridge loan agreements to raise a total of $70,000, $20,000 from “note holder A” and $50,000 from “note holder B”. The loans had interest ranging from 0% - 3%. The loans were unsecured.

 

In connection with these loans, the Company had issued 140,000 shares of common stock, having a fair value of $70,000 ($0.50/share), based upon recent third party services rendered at that time, and 20,000 warrants to one lender having an exercise price of $1, expiring September 2013. The fair value of the warrants was $6,968.

 

The 140,000 shares of common stock issued in connection with the bridge loans was treated as a debt discount of $70,000. The remaining valuation of the warrants, $6,968, was recorded as interest expense.

 

The Company applied fair value accounting for the warrants issued to the lender. The fair value of the warrants granted was estimated on the date of grant using the Black-Scholes pricing model. The Black-Scholes assumptions used were as follows:

 

Exercise price		$	1	%
Expected dividends			0	%
Expected volatility			200	%
Risk fee interest rate			0.35	%
Expected life of warrant			1.5 years
Expected forfeitures			0	%

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

On June 25, 2012, $30,000 was repaid to “note holder B” and the remaining $20,000 was converted into 40,000 shares of common stock ($0.50/share) subsequent to June 30, 2012. There was no gain or loss on conversion.

 

On July 5, 2012, while in default with “note holder A”, the remaining $20,000 was converted into 40,000 shares of common stock ($0.50/share) June 30, 2012. There was no gain or loss on conversion.

 

(C) Debt Discount

 

The following is a summary of Debt and Debt Discount at June 30, 2012:

 

Debt discount		$	70,000
Amortization of debt discount to interest expense			(67,556	)
Debt discount – net		$	2,444

 

Balance December 31, 2011		$	-
Proceeds - 2012			70,100
Repayments			(30,000	)
Less: debt discount – net			(2,444	)
Notes payable – net – June 30, 2012		$	37,656

 

Note 6 Redeemable Series A, Convertible Preferred Stock and Stockholders’ Equity

 

(A)

Preferred Stock

 

On November 30, 2011, the Company designated Series “A” Preferred Stock, with the following rights:

 

·

Voting rights – each share has two votes.

·

Conversion – each share is automatically convertible into two(2) shares of common stock on December 1, 2013. (See Redeemable Preferred Stock below).

·

No dividend rights.

·

No liquidation rights.

 

The Company issued 5,000,000, Series A, convertible preferred shares of stock, as a bonus to its Chief Executive Officer for services rendered, having a fair value of $480,000 ($0.096/share), based upon the fair value of the services rendered, which represented the best evidence of fair value.

 

The Company has determined that no beneficial conversion feature or derivative financial instruments exist in connection with the Series “A”, convertible preferred stock, as the conversion rate was fixed at an amount equal to the market price of the Company’s common stock. Additionally, there are a stated number of fixed shares.

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

Redeemable Preferred Stock

 

Under Regulation S-X, Rule 5-02-28, preferred stock must be classified outside shareholders’ equity when the stock is:

 

● Redeemable at a fixed or determinable price on a fixed or determinable date,

● Redeemable at the option of the holder, or

● Redeemable based on conditions outside the control of the issuer.

 

Since the Series A, convertible preferred stock is redeemable on December 1, 2013 it is presented on the balance sheets as “Redeemable Preferred Stock” in a manner consistent with temporary equity.

 

There are no other features associated with this class of redeemable preferred stock, which require disclosure. The carrying amount and redemption amount are $480,000. There are no redemption requirements.

 

(B)

Common Stock

 

During the six months ended June 30, 2012, the Company issued the following shares for cash, debt discount and services rendered:

 

Type		Quantity				Valuation				Range of Value per share
Cash			280,000			$	140,000			$	0.50
Debt discount (1)			140,000				70,000				0.50
Services rendered (2)			45,000				22,500				0.50
Total			465,000			$	232,500			$	0.50

 

(1) See Note 5(B)

(2) In connection with the stock issued for services rendered, the Company determined fair value based upon the value of the services provided, which was the most readily available evidence.

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

(C)

Warrants

 

The following is a summary of the Company’s warrant activity:

 

		Number of Warrants				Weighted Average Exercise Price
Balance at December 31, 2011			-			$	-
Granted			20,000			$	1.00
Exercised			-			$	-
Forfeited			-			$	-
Balance at June 30, 2012			20,000			$	1.00

 

The weighted average remaining life for all outstanding warrants at June 30, 2012 is 1.21 years. All warrants are exercisable and fully vested. The intrinsic value at June 30, 2012 and December 31, 2011 is $0 and $0, respectively.

 

Note 7 Commitments

 

Effective September 1, 2011, the Company executed an employment agreement with its Chief Executive Officer and Chief Financial Officer, under the following terms:

 

● Salary - $120,000 - 240,000 per year,

● Stock options – amount yet to be determined; and

● Term – 3 years

 

Note 8 Going Concern

 

As reflected in the accompanying financial statements, the Company had a loss of $153,283 and net cash used in operations of $63,337 for the six months ended June 30, 2012; and a working capital deficit of $158,962 for the period ended June 30, 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue its operations is dependent on Management’s plans, which include the raising of capital through debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.

 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2012

(Unaudited)

 

The Company expects to use its working capital to implement a marketing program to increase awareness of its business model, which includes, but is not limited to, acquisition of private companies, with the intention of taking those companies public in the United States and possibly dual listing those entities abroad. In the event that operating cash flows are slowed or nonexistent, the Company plans to reduce its overhead wherever possible.

 

Depending upon market conditions, the Company may not be successful in raising sufficient additional capital to achieve its business objectives. In such event, the business, prospects, financial condition, and results of operations could be materially adversely affected hence there is certain doubt about the Company’s ability to continue as a going concern.

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

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

 

For the six months ended June 30, 2012:

 

The Company had revenues amounting to $392,500 for the six months ended June 30, 2012. The general and administrative costs were $52,609; and the professional fees paid to accountants and lawyers on behalf of our clients and also for our own accounting and legal matters amounted to $127,651. For the period ended June 30, 2012, we accounted for $239,999 of salaries albeit we accrued almost the entire amount; finally we accounted for a further $125,524 of expenses that included $74,524 of amortization of debt discounts; the difference was either non-recurring or did not form part of our normal company expenditure.

 

Our profit & loss analysis for the period ended June 30 2012 is as follows:

 

General and Administrative:
Advertising and promotion		$	13,058
Bank service charges			1,902
Investor Relations			2,000
Travel			13,173
Website Maintenance			3,920
Client entertainment			8,701
Other expenditure			9,855
		$	52,609
Salaries:
Officers and Directors		$	180,000
Employees			59,999
		$	239,999
Professional Services:
Accountants		$	31,633
Edgar Services			3,975
Legal			41,000
Tax Consultants			7,500
Tranfers Agents			1,740
Other professional services			41,803
		$	127,651
Other:
Commision expense			12,500
Dubai - Business license and permit fee			38,500
Interest expense - Debt Discount			74,524
		$	125,524
Total Expenditure		$	545,783

 

 

The net loss for the period was $153,283 and the comprehensive loss, due to $540,000 of unrealized losses on available for sale marketable securities, amounted to $693,283.

 

At June 30, 2012, the Company had 29,245,700 shares issued and outstanding, the weighted average was 28,924,931 shares hence the loss per share was $(0.01).

 

For the six months ended June 30, 2011:

 

The Company had revenues amounting to $22,581 for the six months ended June 30, 2011. The general and administrative costs were $41,621; and the professional fees amounted to $13,184. For the period ended June 30, 2011, we accounted for $41,621; finally we accounted for a further $43,400 of expenses made up of $16,400 of commissions paid to third parties and $27,000 relating to our Dubai license and permit fees.

 

Our profit & loss analysis for the period ended June 30 2011was as follows:

 

General and Administrative:
Advertising and promotion		$	3,880
Bank service charges			608
Travel			27,040
Client entertainment			3,693
Other expenditure			6,416
		$	41,637
Salaries:
Officers and Directors		$	41,621
		$	41,621
Professional Services:
Accountants		$	5,000
Other professional services			8,184
		$	13,184
Other:
Commision expense			16,400
Dubai - Business license and permit fee			27,000
		$	43,400
Total Expenditure		$	139,842

 

 

The net loss for the period ended June 30, 2011 was $117,261.

 

At June 30, 2011, the Company had 28,771,100 shares issued and outstanding, the weighted average was 28,694,859 shares hence the loss per share was $(0.00).

 

For the three months ended June 30, 2012:

 

The Company had revenues amounting to $285,000. The general and administrative costs were $244,286 for the three months ended June 30, 2012.

 

The profit from operations for the three month period ended June 30, 2012 was $40,714. The interest expenses due to debt discounts amounted to $54,445 hence leaving a net loss of $13,731 for the three months ended June 30 2012.

 

The Company had 29,245,700 shares issued and outstanding at June 30, 2012. The weighted average of the Company shares issued and outstanding was 29,035,315 hence the loss per share was $0.00.

 

Finally, the unrealized loss on available for sale marketable securities was $75,000 hence the comprehensive loss for the three month period ended June 30 2012 period was $88,731.

 

For the three months ended June 30, 2011:

 

The Company had revenues amounting to $0. The general and administrative costs were $97,328 for the three months ended June 30, 2011.

 

The net loss for the three month period ended June 30, 2011 was $97,328. The Company had 28,771,100 shares issued and outstanding at June 30, 2011. The weighted average of the Company shares issued and outstanding was 28,721,423 hence the loss per share was $0.00.

 

Finally, the unrealized loss on available for sale marketable securities was $1,079,240 hence the comprehensive loss for the three month period ended June 30 2011 was $1,176,568.

 

LIQUIDITY AND CAPITAL RESERVES

 

As of June 30, 2012, the Company had $105,758 in cash and net cash used in operations of $63,337. For the six months ended June 30 2012, the Company had a net loss of $153,283 and a net comprehensive loss of $693,283. The working capital deficit amounted to $158,962. Finally, the Company had a positive balance of $571,038 of Shareholders’ Equity for the period ended June 30, 2012.

 

In February and March 2012, the Company entered into two 90 day bridge loan agreements to raise a total of $70,000, $20,000 from “note holder A” and $50,000 from “note holder B”. The loans had interest ranging from 0% - 3%. The loans were unsecured.

 

In connection with these loans, the Company had issued 140,000 shares of common stock, having a fair value of $70,000 ($0.50/share), based upon recent third party services rendered at that time, and 20,000 warrants to one lender having an exercise price of $1, expiring September 2013. The fair value of the warrants was $6,968.

 

The 140,000 shares of common stock issued in connection with the bridge loans were treated as a debt discount of $70,000. The remaining valuation of the warrants, $6,968, was recorded as interest expense.

 

The Company applied fair value accounting for the warrants issued to the lender. The fair value of the warrants granted was estimated on the date of grant using the Black-Scholes pricing model.

 

The Black-Scholes assumptions used were as follows:

 

Exercise price		$	1
Expected dividends			0	%
Expected volatility			200	%
Risk fee interest rate			0.35	%
Expected life of warrant			1.5 years
Expected forfeitures			0	%

 

On June 25, 2012, $30,000 was repaid to “note holder B” and the remaining $20,000 was converted into 40,000 shares of common stock ($0.50/share) subsequent to June 30, 2012. There was no gain or loss on conversion.

 

On July 5, 2012, while in default with “note holder A”, the remaining $20,000 was converted into 40,000 shares of common stock ($0.50/share) subsequent to June 30, 2012. There was no gain or loss on conversion.

 

 

It is the Company’s intention to seek additional debt financing, which we plan to use as additional working capital to implement our marketing program to increase awareness of our business model and also to expand our operations via the acquisition of companies that are in a similar space and industry as ours, although we have not identified any companies that we would consider acquiring.

 

However, we do not have any verbal or written agreements with anyone to provide us with debt financing. Any short fall in our projected operating revenues will be covered by:

 

1) The cash fees that we expect to receive during the next 12 months from the four clients we currently have under contract.

 

2) Reducing our expenditures; and

 

3) Receiving loans from one or more of our officers even though at the present time, we do not have verbal or written commitments from any of our officers to lend us money.

 

Depending upon market conditions, the Company may not be successful in raising sufficient additional capital for it to achieve its business objectives.

 

In such event, the business, prospects, financial condition, and results of operations could be materially adversely affected.

  

FUTURE PLANS

 

We currently have five clients under contract, Arrow Cars SL, Black Swan Data Limited, RFC KK., CDP Security Group Limited (“Direct CCTV”) and Regis Cards Limited.

 

We anticipate signing up an additional three clients by the end of 2012. However, we cannot guarantee that we will sign up any new clients in 2012 or receive any revenues from new clients in 2012.

 

Our specific plan of operations and milestones for August 2012 through July 2013 are as follows:

  

DURING THE THIRD QUARTER OF 2012, WE INTEND TO:

 

CONTINUE TO DEVELOP THE INTRODUCER NETWORK FURTHER IN HOPE OF ATTRACTING NEW INTEREST FOR OUR SERVICES.

 

We currently are relying on introductions to potential clients by the following firms in Asia and Europe:

 

1.

Merchant House Group (London), a United Kingdom registered investment house;

 

2.

TAP 09 Gmbh, an Austrian management consultancy firm based in Wien, Vienna;

 

3.

Mashreq Bank, an Asian retail bank based in Dubai, U.A.E.; and

 

4.

ABN Amro Private Bank based in Amsterdam, the Netherlands.

 

5.

Various other professionals and introducers in the United Kingdom that are not linked to any specific firm.

 

We do not have any verbal or written agreements with the four firms identified above, as our relationship with each of them has been developed over the past year or so.

 

 

CREATE A MORE EFFICIENT SYSTEM FOR REVIEWING PROSPECTIVE BUSINESS.

 

Our new business review system will change in 2012. We will concentrate our efforts on the quality of the company that is introduced to us. We will start off by sending the client a standard due diligence list and request that they complete the list and send us the support for review. We will then follow-up the due diligence with a “site visit” in order to properly understand our client’s business model and more importantly meet the principals in person. We began this process in July 2012 and it has an added a cost of approximately $5,000 per company reviewed. We are funding this additional expense from our operational income, mainly income receivable from clients currently under contract.

 

EXPAND OUR CONSULTANCY TO INCLUDE MORE MERGER AND ACQUISITION ACTIVITY.

 

We intend to form relationships with merger and acquisition specialists in both during 2012, which, hopefully, will enable us to: 1) find potential merger and acquisition candidates, 2) introduce our clients to brokers and investment bankers, and 3) introduce the our clients to the appropriate professionals (attorneys and accountants) to assist them in a public offering or exchange listing. The only additional cost for this activity will be a very small administrative burden for telephone calls and communications to be funded out of operational income, mainly income receivable from clients currently under contract.

 

DURING THE FOURTH QUARTER OF 2012, WE INTEND TO:

 

EXPAND OUR NETWORK OF CONTACTS WITHIN THE INVESTMENT COMMUNITY IN DUBAI

 

Our network of investment companies in Dubai is currently small; however, we intend to substantially expand our Dubai network in order to enable us to make introductions on a more institutional level. From October 2012 onwards, we intend to develop our network to at least twelve Investment Institutions who may have interests in minority shareholding in companies from outside of the Middle East Region. We anticipate a small administrative cost to be no more than $10,000 for such development to be funded from operational income, mainly income receivable from clients currently under contract. 

 

BETWEEN AUGUST 2012 AND DECEMBER 2012, WE INTEND TO:

 

SIGN CONTRACTS WITH A MINIMUM OF THREE NEW CLIENTS.

 

We have a pipeline of at least twelve potentially new clients that we are currently reviewing and we hope that we will gain at least three new consultancy contracts in 2012. Hopefully, this pipeline will grow during 2012 and early 2013, making the possibility of attracting at least three new clients more achievable.

 

This section of the annual report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

 

DURING THE FIRST SIX MONTHS OF 2013:

 

WE INTEND TO EXPAND OUR OPERATION INTO DUBAI

 

If we are able to raise sufficient funds, it is our intention to open a fully staffed office in Dubai within the first six months of 2013. The first step will be get obtain a Category Four Dubai Business License. This will permit us to have an office and do business within the confines of the DIFC (the Dubai International Financial Centre). We will be looking to employee at least four new members of staff; two accounting assistants, one office manager and one IT person.

 

 

Cautionary Forward - Looking Statement

 

The following discussion and analysis of the results of operations and financial condition of Global Equity International, Inc. should be read in conjunction with the unaudited financial statements, and the related notes. References to “we,” “our,” or “us” in this section refers to the Company and its subsidiaries. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

 

Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following:

 

·

the volatile and competitive nature of our industry,

·

the uncertainties surrounding the rapidly evolving markets in which we compete,

·

the uncertainties surrounding technological change of the industry,

·

our dependence on its intellectual property rights,

·

the success of marketing efforts by third parties,

·

the changing demands of customers and

·

the arrangements with present and future customers and third parties.

 

Should one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results of current and future operations may vary materially from those anticipated.

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934) were effective.

 

Management’s Report on Internal Control over Financial Reporting

 

Commencing with our Annual Report for the 2011 fiscal year, our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

 

(1)

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

 

 

(2)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and

 

(3)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

At June 30, 2012, we carried out an evaluation required by Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

 

Based upon such evaluation, such person concluded that as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level because, due to financial constraints, the Company does not maintain a sufficient complement of personnel with an appropriate level of technical accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial accounting and reporting requirements. In the event that we may receive sufficient funds for internal operational purposes, we plan to retain the services of additional internal management staff to provide assistance to our current management with the monitoring and maintenance of our internal controls and procedures.

 

This Quarterly Report does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

 

Changes in internal control over financial reporting.

 

We did not change our internal control over financial reporting during our last fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

The Company is not aware of any threatened or pending litigation against the Company.

 

Item 1A. Risk Factors.

 

Not applicable.

 

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

 

On May 21, 2012, the Company issued 25,000 restricted shares of common stock to Mr. Stephen Stanton (a UK citizen) in exchange for services valued at $12,500.

 

On May 21, 2012, the Company issued 30,000 restricted shares of common stock at $.50 per share to an investor.

 

 

On May 22, 2012, the Company issued 200,000 restricted shares of common stock at $.50 per share to an investor.

 

On June 7, 2012, an investor agreed to subscribe for 50,000 restricted shares of common stock. The Company issued the shares to this investor on July 2, 2012, and received subscription funds from this investor the same day July 2, 2012.

 

On June 21, 2012, the Company issued 20,000 restricted shares of common stock to one of our Directors, Mr. Adrian Scarrott, in lieu of $10,000 in accrued salary.

 

Subsequent to June 30, 2012, the Company issued 40,000 restricted shares of common stock to one lender upon conversion of debt.

 

The proceeds from the sales of the Company’s common stock were used as working capital and for repayment of debt.

 

The issuances of the above shares of common stock were exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Regulation S promulgated thereunder.

 

Item 3. Defaults upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

See Exhibit Index below for exhibits required by Item 601 of regulation S-K. 

 

EXHIBIT INDEX

  

Exhibit No. Description

 

List of Exhibits attached or incorporated by reference pursuant to Item 601 of Regulation S-K:

 

Exhibit		Description
31.1 *		Certification under Section 302 of Sarbanes-Oxley Act of 2002
31.2 *		Certification under Section 302 of Sarbanes-Oxley Act of 2002
32.1 *		Certification under Section 906 of Sarbanes-Oxley Act of 2002
32.2 *		Certification under Section 906 of Sarbanes-Oxley Act of 2002

 

* Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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 EQUITY INTERNATIONAL, INC.
Date: August 10, 2012	/s/ Peter J. Smith
	Peter J. Smith
	President and Chief Executive Officer
	(Principal Executive Officer)
Date: August 10, 2012	/s/ Enzo Taddei
	Enzo Taddei
	Chief Financial Officer
	(Principal Accounting and Financial Officer)